Your City's Wealth Isn't Where You Think
Your City's Wealth Isn't Where You Think
Small investments in poor neighborhoods are the best way for a community to build wealth. They are also the best way to lift people out of poverty without displacing them from their neighborhood.
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I didnt get any kind of explanation for this. Why is the pictured neighborhood worth so much? Are those homes being listed for more than the rich neighborhood homes? Are the residents earning more?
My understanding is that they are considering how much a neighborhood is "worth" in terms of the amount of tax revenue provided to the city. So, although each individual house on a cul-de-sac produces more tax revenue than each house in the poorer crescent (they cost more and so generate more property tax revenue; their residents make more and so generate more in sales and income tax revenue), because the poorer neighborhood is much denser, the total revenue is much larger.
I will admit. though, that I posted the article because I found it interesting but didn't feel like I fully got my head around it, and was hoping to get some input from the community.
Strong Towns and Not Just Bikes both go over the math more in other articles/videos, but I'll try to provide a decent summary.
Basically, the cost to maintain the roads and infrastructure in a city are paid for by everyone in the area, and because cities are usually smaller and mixed-use, you have several homes and businesses chipping in to pay the same mile of asphalt and water/sewer.
When you get to the suburbs, even though they pay more in taxes because they're larger and newer, they're also more spread out, often with a large highway out to them. They require this dedicated infrastructure line, and still require fire/police/garbage services, which requires more staffing, more buildings, and more trucks.
Imagine you're playing two games of Cities Skylines.
In the first game, you have small, 2-lane roads, your houses and apartment buildings are small, one-four block sizes, you have a corner store every other street, and because everything is within 5 blocks, people walk to their destination. You really only need one fire station, one police station, and a dump.
In the second game, you have a highway to a residential-only area. All your residences are 6 blocks big and in cul-de-sacs. You'd likely have to have one police/fire stations on one side of the suburb and one on the other in order to get full coverage. They'd require their own garbage dump in order to get the best service, and you'd have to run sewer/water lines out to them.
Which of these cities do you think would do better financially?
If you'd like more supplementary reading/watching here are the other videos that go into this more in-depth:
- https://www.youtube.com/watch?v=syP8g8HBcy4
- https://www.youtube.com/watch?v=QP5UCwMTjFk
- https://www.youtube.com/watch?v=DyDRZjgiraY
- https://www.youtube.com/watch?v=7Nw6qyyrTeI
That last video is actually part of a whole playlist, which starts here: https://www.youtube.com/playlist?list=PLJp5q-R0lZ0_FCUbeVWK6OGLN69ehUTVa
Ive seen NJB explaining density generating more revenue, but this is a bit of a different take. Higher income high density exists, and like in this image, lower density low income is a thing.
The cost to the city is the same but the poor block is worth 78% more and, subsequently, pays 78% more taxes to the city, than the affluent block.
Is really strange, i do not believe the pictured poor neighborhood pays more taxes than the pictured rich neighborhood. The dense downtown business area vs the wide open taco johns, sure, but not the residential comparison.
A lot of strong towns framing uses "financial productivity" defined as tax revenue per unit area, usually acre. Poor neighborhood's houses may be cheap, but are packed much more densely, leading to higher revenue per unit area. less in taxes per lot, but also lower maintenance costs per lot.
The efficiency and therefore cost of providing services is a big factor, which I think doesn’t occur to people unfamiliar with the formula Strong Towns uses to assess this. Multiply that higher efficiency by the higher lot density and that’s where the winning numbers come from.
The pictured neighborhood at least isnt that dense. Its still single family homes spaced apart. This whole density for revenue idea has always focused on things like multi story apartment complexes and packed together downtowns.
Those lots are probably a quarter the size of the lot I'm on, in a affluent suburban house. Maybe even smaller
Its true that it's not that dense though.
It's also pretty likely that there are more residents per house than a typical affluent neighborhood.
You're coming at it from the wrong angle. The reason it's worth more is not because the owners are paying more in taxes, but rather, the costs to maintain the neighborhood are less, allowing the money to be used for other improvements.
The cost to the city is the same
What type of taxes? And what proportions of taxes paid from what service? Historically there are areas that get bills proposing a sugar tax, which almost always pass in poor areas but almost never pass in richer areas. Richer areas generally have access to tap water and poorer areas may have to supplement tap water for things like soft drinks or bottled water, nickle and dimeing people who actually use those nickles.
For example that was a real bill that passed in my local neighborhood growing up, which raised the cost of living for many people. On the other hand, it's true that a city right next door paid exorbitantly more in taxes (in the billions)... at least on paper. However almost 80% of those came solely from property sales alone - i.e. rich people buying houses, not sales tax to local businesses while also not being taxed for the same things.
All taxes. And thats not how laws work, you dont have tax bills pass for some neighborhoods but not others, the whole city has one tax bill.
They almost intentionally make the assertion without investigating the "why", but it's almost certainly the property density.
In the affluent neighbourhoods, a property might be worth twice as much on average but it's on a lot 3x the size with wider and more comfortable streets throughout, likely with significantly more public green spaces.
A community park in an affluent neighborhood costs the city money to maintain, where in a poorer higher density neighborhood it instead would be 30 little houses on it each contributing property taxes.