GLENWOOD SPRINGS, Colorado - A new economic study commissioned by a regional land planning institute says local governments have the potential to get more bang for their tax-return buck down on Main Street than at the big-box retail centers.
When compared on a basis of tax revenue per acre, the dense, mixed-use urban development pays better dividends than its large-format suburban mall counterpart, concludes the study prepared for the Sonoran Institute's Colorado program, which is based in Glenwood Springs.
"Public finances are being hammered in so many communities, and economic development has taken on renewed importance," said Clark Anderson, director of the institute's Western Colorado Legacy Program.
"With many of our local communities already working to try to create vibrant, walkable downtowns, we thought it would be good to look at that from a tax revenue perspective," he said.
Anderson was familiar with the work of Public Interest Projects, a for-profit real estate developer in downtown Asheville, N.C., which had taken its research in that community and applied it to other places around the country.
He contacted the author of the study, Joe Minicozzi, and arranged for him to run the numbers for Glenwood Springs and Rifle, as well as in Mesa County.
"It really turns on its head the conventions we have in looking at development decisions, and that the big-box development brings the big tax revenue potential," Anderson said. "When you look at it on a value-per-acre basis, it's really striking."
In the local comparison, Minicozzi uses 2010 Garfield County property taxes as the basis in coming up with a yield-per-acre for property taxes, as well as both actual and potential sales taxes.
As an example, the Denver Centre mixed-use building at the corner of Seventh and Blake in downtown Glenwood Springs generates $44,000 in total local taxes on just one-sixth of an acre, according to the study.
That includes both property and sales taxes for the city of Glenwood Springs and Garfield County government, Minicozzi explains in the study.
The Glenwood Meadows development, by comparison, obviously generates far more outright annual tax benefit, at $6.23 million, using 43 acres to do so.
So on a per-acre comparison, it would take nine acres of mixed-use buildings similar to the Denver Centre to yield as much total local tax income as 43 acres of Glenwood Meadows type of development, Minicozzi's report concludes.
Across the board, other downtown commercial and mixed-use buildings outperform their big-box counterparts using the per-acre tax revenue comparison, both in Glenwood Springs and Rifle.
It's like comparing the value of a vehicle based on miles per tank (large-format commercial mall) versus miles per gallon (mixed-use downtown development).
"Many communities have tended to look at real estate on a miles per tank basis," Minicozzi said in a recent interview. "But if you look at it on a miles-per-gallon basis, all of a sudden the data on that vehicle changes."
"New urbanist" style downtown redevelopment, with its focus on mixing high-density residential with retail and commercial office space in a pedestrian-friendly setting, also tends to yield higher property values, he said.
Add the cost of public services to accommodate the needs of a large mall development compared to a dense downtown area, and the cost-versus-benefit numbers are even more telling, Minicozzi said.
"A lot of people say local governments should be run like a business," adds the Sonoran Institute's Anderson. "If that's the case, then it's important to understand where money is coming it, and where it's going out.
"What this study also shows is that what's good for the cities and towns in terms of infill development and creating more walkable, mixed-use development is also great for the county," by way of higher property tax yields, Anderson said.
The study was recently presented in both Glenwood Springs and Rifle in cooperation with the downtown development authorities in those cities, the Roaring Fork Business Resource Center and the Rifle Area Economic Development Corp.
Additional presentations of the study are expected to follow, Anderson said.