As a Thursday bonus, I wanted to send along a copy of a report I recently put together for the City of East Gull Lake, where Community Growth Institute has not only served as City Planner for the last ten years but where my family and I have lived since 1996. This gives me some liberty to use real examples since I can pick on myself. Some of the information I'm passing on here was originally developed for this blog, and I'll link that in. It is a small example of how the Strong Town discussion is becoming part of the larger debate.

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In the past decade, city officials have debated off-lake development densities. The debate has often been between 2.5-acre and 5-acre lot sizes, the former being preferred ultimately because of the flexibility it provided the landowner. Support for this development approach has been based on a number of specific values: 

  • The community preference for the low-density development pattern of 2.5 and 5 acre lots.
  • Protecting the right of a property owner to develop their property in a reasonable way.
  • The desire to promote growth and development throughout the community. 

The last decade has also seen some developments built in this style that have been less than successful in the market. That would include:

  • Maplewood Ridge (10 of 14 lots vacant)
  • Gull Meadow Estates (9 of 11 lots vacant)
  • Ruth Lake Estates (10 of 11 lots vacant)

Currently there is a glut in the market for off-lake lots. The CGI Planning Team has analyzed sales and marketing data and estimated that the Brainerd Lakes Area has in a best-case at least ten years and, if we have truly adjusted to a “new norm”, potentially over thirty years worth of vacant, off-lake lots available in the market today.

Each of these failed developments in East Gull Lake has roads that are being maintained by the city, yet the city collects minimal amounts of property tax from the undeveloped lots. That means the general taxpayer is subsidizing these developments.

We have also come to understand that, even if the developments were successful, the property tax collected by the city from the properties is a fraction of the cost to maintain the infrastructure that serves them. A handout was provided in last month’s packet that showed how the tax revenue from City Planner Charles Marohn’s house on Leewood Drive would take 37 years to pay for that property’s share of the road cost. The entire $252 received in city tax in 2010 from the Marohn property would not even cover the cost of snowplowing a proportional share of the road that serves it.

Of the three community values listed as supporting the 2.5 and 5-acre off-lake development pattern, the desire for growth and development has its root in the belief that new growth will generate additional property tax that, in turn, will lower overall tax rates. For off-lake development in East Gull Lake, the opposite is happening. Each new development that adds roads will cost taxpayers more to maintain than is gained in new tax revenue, even if the development is successful.

This brings up a fourth community value: the desire to maintain a fair rate of taxation.

How do the remaining two pro-development values – the rights of the property owner to develop and the desire for the 2.5 and 5-acre development pattern – weigh against the desire to keep taxes low?

  • Are the residents of East Gull Lake willing to continue to develop in this way when each new development causes an increase in the overall tax rate?
  • Would residents prefer to require new developments to be cost-effective, which would effectively mean that – at current lot sizes – no new developments would happen off-lake unless they were along existing roads and contained no new municipal infrastructure?
  • Would residents want to consider more-intensive styles of development that would generate more tax revenue if those styles were not traditionally compatible with the character of the community (for example, high-density housing in our off-lake residential neighborhoods)?

The City’s Comprehensive Plan does not suggest how to resolve this clash of values. The outcome of this discussion should ultimately lead to amendments to the plan that would clarify the direction of the City.