This week we're sharing the Strong Towns message throughout Minnesota's Iron Range. As part of that, we're going to take some time and apply some Strong Towns 101 thinking to local development.
Professionals involved in building cities often use the words "efficient" as a way to describe the desired outcome. Here's the definition:
Efficient: achieving maximum productivity with minimum wasted effort or expense.
Of course, efficiency is a matter of perspective. It depends on what is measured. If your job is to light the high school football field, it might be really efficient to buy four of the biggest wattage bulbs your budget allows, one for each corner. If your job is to pay the school's electric bill, it might be more efficient to use a lot more LED lights. One is measuring efficiency in time and effort the other in dollars and kilowatts. Two different approaches, same desire for efficiency.
For automobile fuel efficiency, we don't measure miles per tank but miles per gallon. We understand that the size of the tank tells us little of importance. Just because a car has a huge gas tank does not mean it uses fuel efficiently.
When it comes to cities, however, we tend to judge the success of land development on a miles per tank basis, not a miles per gallon. In other words, we tend to favor policies that result in properties with a high value per parcel rather than a high value per acre.
For example, the Walmart in Grand Rapids is assessed at $10.4 million. There's a lot of money in that tank, which is why we tend to look at it as a really valuable piece of property. However, it sits on 156 acres of land. On a per gallon basis, the way productivity of efficiency would generally be measured, the Walmart is worth $12.63 per square foot.
Let's look downtown at Frame Up, the art gallery in the little one story building on 1st Avenue. On a per tank basis, it doesn't really compare to Walmart. The property is only assessed at $68,000. However, on a per gallon basis, that little art gallery is three times as productive with a value of $37.36 per square foot.
Put another way, if Grand Rapids had developed the Walmart site with small little shops the size of Frame Up instead of one big store, that acreage would be worth $30.8 million and generate three times the tax revenue for essentially the same amount of public expense. Of course, a site developed at that scale would never have that many of the same building type. If would have a mix of small-scale buildings and be developed with a more incremental approach.
These are not isolated cases; these are broad trends we see in communities of all sizes across the entire continent. When we build things incrementally with an eye to future improvements, what results tends to be really financially productive; a high return on investment. When we build in large blocks to a finished state, we tend to get development with low productivity and a short shelf life. These same trends can be measured throughout the Iron Range.
When we step back today and look at cities on the Iron Range, we see two options for new development. The first, and most common, is to find vacant land on the edge of town and expand the city outward. This requires extension of utilities, expansion of service areas and lots of money, both public and private.
The other approach is make use of existing city infrastructure. To fill in a gap somewhere. To make a modest, incremental expansion of an existing building. This type of approach costs the public very little, provides a lower entry point for private investment and results in a tax base that is far more productive financially.
Some questions to consider this week:
- How does our regulatory and incentive approach to developing a business at the scale of Frame Up need to differ from developing a business at the scale of Walmart? Does it currently differ in that way or are changes needed?
- What actions could we take, without spending a lot of money, that would make a productive investment like Frame Up even more successful?
- Would it be easier and less risky for us to secure more businesses the size and scale of Frame Up, or would it be easier and less risky to seek another businesses of the size and scale of Walmart?
All week we're discussing these questions and more here in the comments section below as well as on our discussion board. Please join the conversation.