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Doing the Math

This article has been cross-posted from Strong RI with permission.

One of the fundamental insights of the Strong Towns movement is that in the 20th century we built vastly more public infrastructure than our tax base can support long-term maintenance on. Too much of our shiny and new development is actually low value per acre and for the amount of public investment required to support it. We call this “doing the math.”

For example, a developer comes to your town to build a new cul-de-sac carved out of a farm on the suburban fringe. In exchange for the right to build twenty houses they will build all of the public infrastructure to support them: roads, pipes, power lines, fire hydrants, etc. and then hand that over to the town. The town gets a free road and a bunch of new tax paying houses—growth! Tax receipts go up and the town uses them to pay for more and better schools, parks, public buildings, police, fire, etc. However, the long-term maintenance cost of repairing the roads, pipes, lines, etc. cannot be supported by the low tax revenue per length of road, pipe, line etc. Every thing is great for the first 30 years, but then the road needs to be repaved, the pipes lined, the sidewalk starts looking shabby.

Roughly speaking, public infrastructure needs can be understood as a function of intensity of service, amount of private investment, and land area. Bigger sites have more road fronting them, longer for pipes and wires to travel, etc. Higher demand uses create more demand for wider roads, bigger pipes, and fatter wires. A city or town should, in general, be looking to get the best value per acre. After all the city’s or town’s most fundamental resource is its land. Are you using it well? Are you getting a good return in tax revenue on your public investments? You might be surprised at how properties stack up.

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ProJo: Tax-break plan for proposed Providence hotel to get a hearing July 23

Fogarty Building

As part of that effort, the developers are asking the City Council to approve an ordinance that would exempt the project from property taxes for three years. Starting in the fourth year of the agreement, the project owners would pay 11 percent of the total taxes due, with the amount then going up by 11 percentage points a year until year 12, when 95 percent of the taxes would be due, followed by full taxation after that.

Though the City Council is a vote away from enacting a tax-treaty process for developers in the Route 195 corridor that doesn’t need council approval, for the rest of the city, the old rules, which include public hearings and multiple council votes, still apply.

Though the Fogarty Building’s destruction has been contemplated many times over the last several years — Procaccianti took out a demolition permit in 2011 but didn’t use it — the Fogarty Building has had its defenders. It is one of the city’s few surviving examples of the “brutalist” architectural style, which features exposed concrete and angular, fortress-like designs. The name comes from the French word for raw concrete, not physical brutality.


This morning, the Procaccianti owned Old Public Safety Building Memorial Parking Lot™ has site fencing covering most of it, I don’t know why.

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PBN: Why is it so hard to build in Providence?

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Cranes constructing the Waterplace Towers in 2006.

Development is not predictable, to the point of being difficult. Companies that have built projects in the city, or who want to, describe a market beset by financial obstacles, administrative hurdles and, as a result, a yearslong paucity of new construction – even as cranes have seemingly dominated the skyline in Boston.

Despite the poor general economy and loss of jobs, however, Providence has construction costs that remain as high as in Boston, according to development professionals. But the rents that can be collected from buildings in Providence, whether from business tenants or apartment residents, don’t approach those of Boston.

And the property taxes are higher here – particularly for residential buildings. In Boston, an apartment building falls under the residential tax rate, currently $12.11 for each $1,000 of assessed value. In Providence, the same building pays the commercial rate of $36.75.

All of this amounts to what developers call a “feasibility gap” for Providence, the void between rents and costs of construction.


What do you think needs to be done (if anything) to jump start development in Providence?

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News & Notes

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Manchester, England – Photo (cc) Nathan Makan

The Economist: Heading north – Londoners in their 30s are moving out

Central Birmingham is buzzing. The fine square in Brindleyplace is lined with snazzy restaurants, and after 6pm, smartly dressed office workers. In 2003 the city got a globby new branch of Selfridges, a posh London department store, and in 2011 its first craft beer bar took over a former post office. Behind the redbrick factory facades of nearby Bradford Street, the yuppies are also taking over, quietly occupying new flats within.

Many of these go-getters are former Londoners. According to the Office of National Statistics, a record number of 30- to 39-year-olds left the capital in the year to June 2013: a net outflow of nearly 22,000 (and a 25% increase on 2010). They have settled in Birmingham, which attracted the largest number, as well as Manchester, Bristol and Oxford. London has long shed people in their 30s. Mainly they want bigger, cheaper living-space for their children. London’s soaring house prices have exacerbated the trend: the city’s average property price rose by 19% in the past year. It now stands at £402,800 – in Birmingham it is £133,700.

Those fleeing London are often moving jobs, too.

Speed up the commuter rail, build more housing… boom, we’re Manchester or Birmingham.


The Boston Globe: Marty Walsh goes up against boring architecture

Boston needs bolder buildings, and it needs civic leaders who aren’t afraid to permit them. In what could mark a major turn for Boston’s architectural history, Mayor Marty Walsh signaled Wednesday that not everything needs to built in red brick. Unlike predecessor Tom Menino, he personally won’t be deciding what the tops of new buildings should look like. And, most striking of all, non-boring ideas are now welcome in the city.

“Boston is home to the world’s most innovative thinkers — in science and technology, and in business, art, and architecture,” Walsh said in a speech before the Greater Boston Chamber of Commerce. “Our city’s built environment should reflect this culture of imagination. Too often, in recent decades, new buildings have been merely functional. I believe Boston can do better. We should aim for world-class design. Our historic buildings reflect our unique past. New buildings should project the values and aspirations of our growing city. We can balance the old and new.”

not everything needs to built in red brick.


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News & Notes

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Wetlands to provide a storm surge buffer for New York City. Image from Architecture Research Office

Fast Company: A Plan To Hurricane-Proof New York, With A Ring Of Wetlands

In the wake of Hurricane Sandy, there have been a flurry of ideas on how to deal with the prospect that storms of such magnitude may no longer be once-in-a-lifetime events but the most visible manifestation–if you’re not a polar bear–of the havoc wreaked by climate change.

Seawalls. Levees. The kinds of things the Army Corps of Engineers typically builds to protect low-lying places like New Orleans just aren’t feasible for a place like Manhattan, says Stephen Cassell, the cofounder of New York’s Architectural Research Office. “It’s hard to predict how bad climate change will be,” Cassell says, noting that Sandy’s devastating surge was nearly 14 feet, which wasn’t even the worst-case scenario. “What if we build a barrier and the surge goes beyond that?”

Yes Providence, what if the storm surge is higher than our storm surge barrier?


New York Post: Growing NY through smarter taxes

How might two-tiered taxation work? In New York, land and improvements in residential areas are subject to an 18.6 percent property tax.Thus, land with a taxable value of $10,000 would be taxed $1,860, and improvements with a similar taxable value of $10,000 would owe another $1,860, a total of $3,720. Under a two-tier system, the tax rate for land could jump by, say, 50 percent, while the rate for improvement could be halved.In that case, the owner would pay $2,790 in land taxes and $930 for improvements — keeping the total to $3,720.

But here’s the payoff: The owner’s tax bill under that scheme would climb another $2,790 if he purchased a second lot with a taxable value of $10,000 — but by only $930 if he used that money toward building.Thus, hoarding would be discouraged; development encouraged.

The two-tier property tax has a proven record of success. In 1979, Pittsburgh began taxing land at a rate six times higher than improvements. In the ensuing decade, building permits increased by 70.4 percent.

Via: Nesi’s Notes


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