normalthings wrote: ↑
Wed Feb 24, 2021 1:43 pm
I think a third is still lurking in the background. Lucas has made great strides to reduce and/or stop development. Fantastic
This logic doesn't hold up
How many miles of rail transit could we have built in the past 30 year that as tied up in incentives? Remember, it's not new taxes that cover incentives, it's existing taxes so for the term of the incentives the city is usually negative on the project. Could the city have done something around crime, roads, funded the entire sewer project, replaced the airport terminal or any number of other projects?
Look at how many developers have located next to the streetcar without incentives since it was built. If the city hadn't squabbled over spending the money in the past we could have seen this same result many times over.
There's tens of thousands of empty lots on the east side. If a few deep pockets can't get money and undercut the market rate for their projects it enables everyone else to complete. The more that compete the more housing we have, which keeps leasing rates down across the market.
We don't want a few 300 unit buildings built each year, we want dozens upon dozens of 50 unit buildings.
Schools are a centerpiece of driving business demand and lowering crime.
The average incentives per student is apparently $650 per kid on average in the city. If we assume 23% in school at 500k people
That's about $74 million lost for all schools per year right now. That's about 5000 kids worth of money.
The city is about 30% that number from property taxes for about $22 million per year. Let's say 1/30th is allocated per year for a new 4 mile streetcar line, or $733k. Let's say it drives $1 billion in new development
1,000,000,000 * 0.32 commercial rate to taxable rate = 320,000,000
using the city's 2018 rate as an estimate to get the taxes the city earns
320 million / 100 * 0.6923 = $2.2 million per year
That's a 300% return
The math would thus say that the maximum incentives the city should spend is $733k per year, for 10 years, for $330 million in new development value. The return for the city is roughly the same (no, this isn't right but it shows the ballpark) Beyond that funding infrastrure that developers will build next to without incentives is a better deal
All our current incentives are way over scaled, handing out too much money relative to the value the city gets.
So the idea of rethinking the process, reducing incentive shopping, makes sense.
The city could come out way ahead with slower growth.