Uban Sprawl is killing us early, keeping us unhappy and costing municipalities tens billions. Here are some ideas to help stimulate a conversation. On the table is huge savings in energy and the elimination of unnecessary infrastructure. Smart city planning can even a double the wage of the average person.
Property Tax breaks
Counterintuitive, but strategic in the long term. In the mid 1800’s, Paris innovated with tax breaks for beautiful architecture. The city held annual competitions that exempted the six best projects from city taxes. By doing this they created a infrastructure of skilled labor, and architectural innovation for building owners looking to save money. The cost of the tax breaks offset the increased skilled labour needed to build such buildings. The finished buildings also raised area market values. Thus raising the bar for “everyday” buildings to become better looking.
Winning buildings benefited by being able to charge a higher rent. They garnered a higher sale valuation because of the tax break and prestige of the building. Tenants got a prestigious building to live or work in.
A modern twist on could see an increase in the number of buildings awarded and capped at a 30-year tax holiday. A further rift on this idea would see 3P buildings built to a incredible aesthetic standard. Architectural styles could range from revival beaux arts to full (quality) modernism. A good example of what good design can do is the Marilyn Tower in Mississauga. It gained international attention when the developers held a contest to design the building. It sold out in weeks at a premium. It gathered further attention when it won the Emporis Skyscraper Award.
Urban Density through Tiered Property Tax
From a municipal point of view, density is easier to manage and scales better. To abate sprawl, a tiered tax with the following conditions would create:
- Exciting dynamic urban density (who ever said New York or Paris is boring?)
- Eliminate/reduce need for ever increasing expensive rail transit expansion/upkeep to new suburban vinyl villages (after cheap vinyl siding)
- Concentrate the population footprint to a smaller area to save on infrastructure and unnecessary build out to suburban commuter communities
- Increase happiness (short work commute) and even lower the divorce rate. here
- Increase your wage equivalent of $40k with a short commute. here
- Increased rent and property valuation in those areas, offset by a shorter work commute and the above benefits
- Less cars = less traffic. Get a car2go and save thousands towards a vacation or early retirement
(car payment + parking spot + insurance + gas + maintenance multiply by years)
- Create an attractive world class downtown/uptown full of shops, restaurants, with pretty buildings and clean sidewalks, make the city walkable and bikeable
- A drastic increase in the quality of buildings, beauty of the architecture making it more attractive and act as a magnet for population migration
Generic stucco, Styrofoam, scotch taped low-rise buildings are disposable, forgettable, unattractive and cheap. It is also noisy, creaky, shoddy, and cheap. It is your generic “everyone must own a home” brainwash taken to the lowest denominator. These buildings will not survive 30 years let alone something to pass on to family so why keep building them?
The tiered tax would target single family to 4 story buildings with the following attributes in an effort to eliminate their construction:
Prohibitive property taxes for wooden framed condos or multifamily buildings. A outright ban on anything sub 5 stories, including renos of existing low rise buildings.
The highest taxes would be levied to commercial buildings in high traffic areas of less than 9 stories. As a result, more permanent materials, better buildings, and would increase the skilled unionized labor needed to construct, creating jobs and flowing back into the local economy.
Too much land is being wasted, example being a young city like Calgary having some of the shoddiest, ugliest suburbs and disasterly planned (Toronto) uptowns in Canada if not North America, architecturally speaking. Aesthetics aside, the big issue approving these low rise wooden buildings is that they are not future proof. Later it will be cost prohibitive to demo and rebuild. Just to replace, those new developers would have to account for; demolition, land purchase, building purchase, lease/tenant buyouts, and then the cost of rebuilding as well as the time cost.
A quick fix is to tier the property taxes targeting these non-community orientated quick buck developers. That would push to help create planned, scaled, dense, dynamic, urban centers full of activity, commerce and architectural beauty. Cities must start taking a stronger hand in the planning, approval and development for the overall look and design of their municipalities.
High Property Taxes to discourage new Subdivisions
Urban sprawl, accounts for a huge percentage of municipal infrastructure. Potential buyers to these new far flung developments would be heavily penalized as would be developers, the main culprits. Developers of these mainly cheaply made, cheaply constructed products would be hit with decade plus freezes on development and zoning grants. Coupled with excruciating eastern European style paperwork and much stricter codes on materials and style. This would force the smaller vinyl village type developers out of business and push for redevelopment closer to core. With the above incentives to build taller, more efficient buildings would be built. A trickle down effect would see a reduction in electricity as less coal would be needed to generate and power these inefficient single family homes.
To balance the cost of infrastructure build out, new areas would penalize home buyers with very high property taxes. A starting point would be 7 to 10 times the property tax of a downtown condo or existing home. The homeownership demographic is already changing. Millennials are flocking to increasingly hip downtown cores and renting.
Rings of Property Tax
The farther away from the downtown/uptown core would levy multiples of higher tax. This would counterbalance the flood of would be buyers in new subdivisions to inner tiered and rental units.
More Public Green Space
A collateral of higher density, with city planning, would see local parks rise to prominence, with smaller parks dotted around the uptown/downtown area. Attention would be paid to creating the most beautiful, pleasant parks that balance maintenance costs with visual intrigue. Large canopy style trees should line streets and provide a healthy calming effect from main drags- see here
Pilot Project Idea
Municipalities could take a baby step and conduct a pilot project. Start with a downtown/uptown low density one small street. A focal point would be a 30 year property tax holiday. Here is a rough starting point, with the following conditions:
- Buildings will be rejected if not the city deems it is not architecturally significant and within context of other buildings on that street.
- Buildings would have to be warm, inviting, analog
- Buildings have to be more than 5 stories, with concrete construction, facades would be constructed from stone, concrete, brick, tile
- Building colors would be pre-approved
- City would contribute by having X number of trees on sidewalk/street, having custom manhole, lighting, grates etc to diferenciate.
- Buildings with mixed Retail residential, must be inviting and open to walking traffic
- Residential buildings must have rooftop patios with gardens and some solar type heating.
- Buildings would not be built to LEED specifications (see leed mislead)
- Residential tenants sign agreements not to own cars
- Multinational retail chains spots would be sub 5% of total retailer/restaurant makeup
- A mix of cobblestone and asphalt will be used on the street.
- Wide Mosaic or cobblestoned sidewalks of interesting a geometric or organic pattern
- Street level restaurants and cafes should have unfenced outdoor on sidewalk seating
If done correctly and on a broad enough scale the area will attract tourists.
The average Calgarian earns $55,000 a year, residents living within a pilot project like the above could expect a more than doubling of perceived income.
On the municipal side, billions could be saved in train/rail expansions, and common infrastructure (roads, painting, lights, energy, tunnels, bridges, stop lights, policing, fire, signage, etc).
With the mountain of overwhelming data favoring density to sprawl- why wouldn’t city planners and bureaucrats start looking to save money and futureproof their city?
Source: Trebuchet Research
This material is contains information from publications prepared by the Trebuchet Capital Partners and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of June 2015 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by Trebuchet to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Trebuchet, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.
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