Analysis shows denser mixed-use developments boost tax base amid economic growth

When a development in a residential area includes spaces for other purposes, it creates a higher tax revenue for the municipality.   File photo

Maximizing and mixing land use greatly increases the tax generated per acre, an analysis that boosts the argument for denser developments in the fast-growing Palmetto region reveals.

When a development in a residential area includes spaces for other purposes, it creates a higher tax revenue for the municipality, according to the Value of Placemaking. Denser mixed-use developments create higher land values and therefore higher property taxes, according to the study authored by urban thinker Joe Minicozzi, who was in the region on a speaking tour last week.

Ian Scott, senior ice president of advocacy with Charleston Metro Chamber of Commerce, pointed out the population of the metro region is expected to increase by a quarter of a million by 2030.

"When you think about how to provide roads, water, schools, police and fire protection to the quarter-million new residents the region is expected to add by 2030, you start to understand the need for denser land use patterns in targeted areas," Scott told Palmetto Business Daily. "The Value of Placemaking analysis shows that, on a per-acre basis, high-quality, mixed-use development creates exponentially higher land values. Those higher land values generate more property tax revenue, which in turn allows municipalities to provide high-level services and maintain a stable tax rate."

Scott cited an example in the difference between Mount Pleasant Towne Centre and the Boulevard mixed-use development. He said the former generates "a very healthy $2.29 million per acre in tax revenue." But that sum is eclipsed more than four times by The Boulevard mixed-use development in Mt. Pleasant, which he said generates $10.4 million per acre.

Dan Doyle, senior vice president with The Beach Company, a Charleston-headquartered development firm, agreed higher-density developments "yield much higher productivity."

"Compact, higher-density developments, whether accomplished  through a mix of uses or taller building heights, have proven to yield much higher tax productivity on a per acre basis," Doyle told Palmetto Business Daily.

This is compared to a suburban single-family home or big box retail developments, he added.

"Simply put, higher-density development puts land to more productive use by generating more taxes on a per-acre basis than a single-use or lower-density development would on the same land area," Doyle said. "In addition, the cost to provide infrastructure and other municipal functions to service these high-density communities is often considerably less as well."

He described the differences as striking, especially once ones that appear before other costs associated with sprawl, including commute times, are taken into account.

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