Yep. I did it. I went full click-bait on this article. But I actually believe that this is so important to share that I’ll sacrifice my “don’t copy Buzzfeed” rule in hopes of getting more people to read this.
What is it? I’ll try not to lose you before I get to it, but we need a bit of pre-cursor first.
Cities get a lot of their revenue from taxes (duh.) In particular they get them from property taxes, which in Mankato, is essentially based off how much your home, building, shop, etc… is worth. It’s important to note that generally the LAND is not assessed as heavily for value, but rather what sits on top of it. This is why you can have garbage surface parking lots downtown where property is worth a lot, lot more. This is also why urbanists often favor the Land Value Tax.
Ok, you got that? The city gets a lot of it’s money from property taxes. Let’s move on.
By the way, what I’m about to share with you is essentially third grade math, anyone can do it… If you’re in second grade, you might have some issues, but why are you reading a boring blog about Urban Development anyway? Go outside and play.
Our two examples for today are the Landkamer Building in downtown (owned by Brennan) Mankato and Wal-Mart on Madison Ave.
Both buildings provide essential services to Mankato, Wal-Mart provides a bunch of cheaply made crap that you probably don’t need and paying the lowest possible amount to it’s employees and putting a bunch of people on state run health-care all while piling up a list of grievances too long to list and just generally sucking more than Target.
The Landkamer building provides office space for several small businesses and a great restaurant on the ground floor (auto-play music warning, a UX no-no).
That leaves us with historic, mixed-use building and big box.
Which one is worth more? Well that’s pretty obvious, right? Wal-Mart.
It’s not even close, Landkamer is worth more, tons more. Do the math.
Everything below is city data from the assessors website, so I’m not lying or estimating (some light rounding to make the math easier though.)
IF YOU’RE SKIMMING STOP HERE AND READ THIS!
Wal-Mart sits on 13.77 acres of land (so 14 essentially) and is worth $9,885,900 ($10m). In 2014 it paid $330,442.00 ($330k) in taxes.
Landkamer sits on .25 acres of land is worth $2,400,900 ($2.5m). It paid $95,062 (95k) in taxes.
Ok, so I sucked at math in Highschool, but I’m pretty sure we need to get some kind of base measuring unit to compare. Let’s go by acre.
That means Wal-Mart’s data will be divided by 14 and everything of the Landkamer’s will be multiplied by four.
Per acre Wal-Mart paid ≈ $23,500 and the Landkamer paid ≈ $400,000 in taxes.
Per acre Wal-Mart is worth ≈ $714,000 and the Landkamer is worth a whopping $10m
Wow. Wow. Wow.
If you were to fill Wal-Mart’s footprint with Landkamer buildings at the same value (unrealistic, I know) you would have a property worth $140m putting out $5.6m in taxes every year (assuming constants).
WHY ARE WE BUILDING WAL-MARTS?
This is the crux of my argument against auto-orientated development, it makes no long-term sense. The more land you take up with non-tax generating property (parking lots or empty greens) the more you’re hurting yourself because you’re reducing your tax base and expanding your liabilities (infrastructure.)
Yes, this is an unfair comparison to some degree. When I was explaining the premise of this article to someone they said “Yeah, but I doubt you could chill 10k heads of lettuce at the Landkamer”
He’s right, you couldn’t and that’s a fair point.
But think of all the buildings in Mankato that don’t need to do that. There’s so many that could fit inside mixed used buildings in a denser area.
Like the James R. Weir insurance building.
Ok, I have nothing against these guys, seriously, they’re probably awesome at insurance, but their building just drives me wild every time I pass it.
The building is located at the intersection of Broad and Mulberry. It’s a corner lot in a high traffic area and the lot is about twice the size of the Landakmer building. Above you can see what’s there. Red is the building, yellow is the lot.
Not including the snow pile in the corner I counted 33 parking spots. A massive waste of space when you see how financially productive the Landkamer building is. It could be so much more.
Traditional development pays, just look at Front Street:
4 blocks on front street are worth more than all of Wal-Mart and use less land and infrastructure. Not to mention some of those buildings have been generating tax money for 100 years. Doubt you’ll be able to say the same about Wal-Mart.
As the image says, this isn’t including the Tailwind properties yet so that number is likely to be way higher.
I’m not saying we have to build absolutely everything like downtown, but there’s serious economic and environmental implications to giving every business it’s own building. It just doesn’t make sense and it’s often a waste of resources.
When you finally break it down and do the math, you’ll see that our cities were set up with this in mind. Our forefathers inherently knew how to generate wealth through buildings and city design.
And when our land doesn’t generate wealth for it’s citizens or the city, they often turn to municipal violations to make up the difference.
The important thing to remember is that we can still build this, there’s nothing stopping us. This isn’t greek fire, we haven’t lost the recipe, but it’s largely been regulated out of existence.
We’ve got to start building the way we used to, it’s not a matter of “if” it will catch up to us, it’s a matter of “when.”
And “when,” just like winter in Minnesota, always comes sooner than you think it will.