Peter Katz looked at the numbers, then double-checked them. Still in disbelief, he wanted others to examine what he saw.
When Katz, Sarasota County’s director of smart growth, commissioned a study on the type of development that generates the most tax revenue, he was not expecting the results he received.
“We were shocked at the findings,” he said. “We were convinced there had to be a mistake.”
Many local government leaders around the country believed that large shopping malls and big-box stores, such as Wal-Mart, resulted in the highest tax-revenue returns.
After hearing about an Asheville, N.C.,-based development group and its studies of property taxes in that town that contradicted those beliefs, Katz and his team contracted a similar study in Sarasota County.
Public Interest Projects, which has developed several projects in Asheville, found that mixed-use developments, primarily those in urban settings, generate more property-tax revenue than other kinds of development.
Joe Minicozzi, Public Interest Projects research specialist, encourages a local government to look at itself as a private corporation that creates a product. That product is its land.
“Is the community going to get the proper return on its product?” he asks.
If it’s relying on developments of single-family homes, shopping centers and large-scale stores, he said it is not going to maximize returns.
Minicozzi found in Asheville that the three largest mall and big-box centers generate $1.6 million in property taxes. However, the three developments need more than 153 acres to create those tax dollars.
A high-rise mixed-use development in downtown Asheville generates $1.9 million in property taxes and only needs one acre to do so.
Katz wanted to see if Sarasota County would garner the same results.
The most striking example is between the Wal-Mart in North Port and an urban mixed-use high-rise, such as 1350 Main (see box).
The Wal-Mart store takes up more than 21 acres and is valued at $16 million, while 1350 Main only takes up seven-tenths of an acre and is valued at $64 million.
“People focus on the $16 million and say, ‘Wow!’” said Minicozzi. “Yeah, that’s a lot, but it’s on 21 acres.”
Another example: at $803,000 per acre, the Plaza at Five Points yields Sarasota County 3,500% more tax revenue per acre than Westfield Southgate Mall, which generates $21,752 per acre.
“When you analyze apples-to-apples, it’s staggering,” said Katz.
The reason for the huge difference, according to Minicozzi, is the parking lot.
“Property appraisers don’t take land value into account, only building value,” he said.
Minicozzi said he’s not advocating the construction of many 1350 Mains, because more than one or two couldn’t be supported, but he said more consideration should be given to two-story mixed-use projects and townhouses.
Katz isn’t sure yet what the county plans to do with the information, but he thinks that now that local governments are struggling with their budgets, more support might be garnered for urban revitalization opportunities.
“(This study) is kind of a breakthrough,” said Katz. “And it happened in little old Sarasota County.”
The difference between the Wal-Mart in North Port and 1350 Main in downtown Sarasota is striking. Wal-Mart is valued at $16 million, but is spread out over 21.4 acres. The 1350 Main high-rise is valued at $64 million and only takes up seven-tenths of an acre.
Property Per acre tax yield*
County residential $3,651**
County multi-family $7,807**
City residential $8,211**
Westfield Sarasota Square Mall $10,579
Sarasota Crossings shopping center $13,019
Burger King $15,458
Westfield Southgate Mall $21,752
Urban mixed-use low-rise $91,472
Urban mixed-use mid-rise $790,452
Urban mixed-use high-rise $1,195,740
Contact Robin Roy at [email protected].