And for my last Council meeting, the business park is on the agenda for discussion…so here’s one more attempt to ask questions about the cost and scope of this project.
The background as we know it: 530 acres annexed west of the hospital to be master-planned and developed as a business and residential development. Required improvements include roads (to TH 19, North Avenue, Decker Avenue, 320th Street, “Cedar” Ave. and new interior roadways), sewer (including lift station), water (including elevated storage tank) which ”should not be assessed to business park property, increasing the cost of development.” Phase I is estimated at about $14 million in improvements; Phases II-IV would add another $15 million. The breakdown of the development expected includes not just the commercial/industrial development we hear about most, but a substantial amount of housing and retail.
That cost of development issue should make everyone pause…
Of course, it would raise the cost of development to completely prohibitive levels if the costs were assessed to the property. But, if the costs are not assessed to the property, that burden will fall to the City taxpayers (and state and perhaps federal taxpayers depending on the package of aid that’s cobbled together). Further subsidies to attract business like tax abatement, TIF, etc. will further increase taxpayers’ costs and decrease the tax benefits.
1. My general question: how can we grow the tax base and add jobs without massive subsidies (which is what those infrastructure improvements would be) which would effectively shrink tax revenue to pay off the improvements.
2. My more specific question: how can the Council, staff, business community and taxpayers learn how much it is likely to cost them (and what assumptions about the rate of growth and the economy underlie those projections) and will that cost ever be recouped through tax revenue.
3. I also have question the wisdom of master planning an area which will take decades to build out. My experience on the planning commission with residential development was that the master plan would be drafted, but within just a few years changes would be requested to adjust densities, change housing styles, subtract roads, change stormwater management, etc. Is it likely that the lot layout, use designations, environmental/landscaping/natural features, etc. in the business park will help development or will the plan constrain business development over time?
My bottom line: Northfield has not evaluated the cost of this project for taxpayers over the long term and has not explored meaningful alternatives to reduce cost. Indeed, the entire process has been conducted backwards with questions about feasibility, cost, location, etc. happening after the plan has been drawn without considering that not all development locations and patterns come with the same pricetag.
I am advocating for 2 things:
- maximizing use of current infrastructure before building new (because we’ve already paid for it and are maintaining it). Extending infrastructure in the hope of development is a gamble with tax money I am not willing to take.
- building in patterns which support density (to put more taxpayers per acre or per foot of pipe to support the infrastructure), but not for a particular look and feel.
A little digest of other things I’ve written and where I get my information:
From this blog (with links to many places):
- The cost of doing business: On the New York Times series on business subsidies. Of special note, the difficulty for local governments to determine costs.
- Business incentives and Cabela’s: Detailing the amount of money Cabela’s has received in subsidies and whether it matters.
- League of MN Cities Community Conversations report is out: LMC projects that without policy changes, cities will be bankrupt in the near future. However, the LMC does not consider development pattern or the subsidy issue directly (unfortunately).
- How streets got this way: The prevailing opinions on development, zoning, etc. are not free-market issues, but products of regulatory incentives
- Fixing the problem by looking at development pattern rather than just “grow the tax base” or “raise taxes” – how we development can be more or less expensive depending on how well we utilize our infrastructure dollars.
- Not just liberal types believe in downtown: Opposing the museum theory of downtown by asking about the tax value of dense urban development vs. suburban style business parks.
- Another business park: the highly subsidized Elk Run business park is still empty.
- What can government do? to encourage job development without massive subsidy.
- Infrastructure is important, is crumbling, and needs serious policy change, not just dollars.
- Council talks business park: Same questions, no answers.
From other places:
- Generally, see Strong Towns for much more information and links to even more (full disclosure: I give $$ to Strong Towns because I think their questions are critical). The Friday Digest on their blog give a wealth of information.
- Report on effectiveness of business subsidies from the Lincoln Institute of Land Policy (mostly state level subsidies):
- Comparing the value of development patterns: From New Zealand, Asheville NC, and Northfield.