Who's Footing The Tax Bill?
Oct. 11, 2016
What properties generate the most taxes for Traverse City and Grand Traverse County? Urban Planner Joe Minicozzi of national consulting firm Urban3 has crunched the data – and his answers might surprise you.
Minicozzi presented his findings at both a special city commission study session and public event at the State Theatre Monday. He will make additional presentations today (Tuesday) at 9:30am at Traverse Area District Library and 7pm at Lars Hockstad Auditorium. Minicozzi’s firm was hired to complete a tax base study of every parcel in Grand Traverse County to determine the “economic productivity” of different properties in the region. The study was jointly funded by the city, county, Downtown Development Authority, National Association of Realtors and Traverse Area Association of Realtors.
Minicozzi used a formula called taxable value per acre to equitably compare properties of different sizes and uses – such as shopping centers, mixed-use developments, office buildings, and single-family homes – to show how much tax value would be generated by one acre of each type of property. The formula is based on tax values on file with the county assessor’s office.
Minicozzi’s analysis showed that the properties with the highest taxable value per acre in Grand Traverse County are mixed-used developments in downtown Traverse City. Topping the list is 101 North Park Street, which Minicozzi called “the most tax potent building in your entire county” with a taxable value per acre of $51.6 million. The Red Ginger building follows behind at $21.3 million, with the new Washington Place development coming in at $14 million.
Radio Centre One, Hotel Indigo, Milliken Place, the Beadle Building, River’s Edge and Midtown all also came in high on the list, ranging from $12.3 million to $4.6 million in taxable value per acre. The Village at Grand Traverse Commons ($1.9 million) and Park Place Hotel ($1.1 million) were shortly behind.
In comparison, the Traverse City Meijer store has a taxable value per acre of $396,000, while Grand Traverse Crossing/Walmart came in at $386,000. County single-family homes ranged from $189,000 to $417,000 (depending on whether they were lakeside), while city single-family homes ranged from $578,000 to $1.1 million (depending on when they were built; historic and post-2000 homes came in highest). Minicozzi noted that Oryana produces nearly as much taxable value per acre – $786,000 – as the Grand Traverse Mall at $842,000. “Would you have thought of your food co-op being almost as tax productive as the mall?” he asked.
The point of comparing the taxable value per acre of different properties, according to Minicozzi, is to help communities build wealth by efficiently utilizing space with tax-productive developments. “If you’re going to go out and do development…what’s going to give you the biggest bang for the buck?” he said. “Two-and-a-half acres of Red Ginger would equal the 64.5-acre Grand Traverse Mall.”
Tax production becomes particularly important in communities with a high number of tax-exempt properties (including parks, government buildings, churches, hospitals, airports, schools and nonprofits) – as is the case in both Grand Traverse County and Traverse City. A full 30 percent of the land in Grand Traverse County is tax-exempt, according to Minicozzi. “That’s on the high end,” he said. “We generally see counties at 12 to 20 percent.”
In Traverse City, 53 percent of land is tax-exempt – also “on the high end for a city that doesn’t have a major university,” Minicozzi said. “You have your airport and all the other areas around it within your city limits that drive up that number.” Downtown, 23 percent of properties are tax-exempt. “Downtown is your most fertile soil, where you can get the most value. So be aware of how you utilize that,” he said.
Minicozzi closed his presentation with a handful of takeaways for city and county leaders to consider going forward. They include:
> Prioritizing Infrastructure Investment: Are outlying developments in the county with a “thin level of taxable value” worth the cost of infrastructure needed to reach and sustain them?
> Focus On Downtown: “Downtowns are your golden gooses that lay golden eggs,” Minicozzi said. “You’ve got to feed the goose. You can’t just make pâté out of it.”
> Understand Tax Subsidies & Policy: Development subsidies like brownfield funding aren’t the only incentives communities extend to developers, according to Minicozzi. The way tax policies and zoning codes are written can also inadvertently incentivize certain types of development - including ones that produce no or low taxes, such as surface parking lots and cheap buildings. “Make sure you’re operating with a level playing field," he said. "If you essentially subsidize parking in a suburban environment, then level the playing field downtown."
> Low Density=Low Wealth: Hinting at community debate over building heights, Minicozzi encouraged residents to “have a better design discussion (about developments). If design is the issue, I can buy that. Make design the conversation, rather than arbitrary measures." Minicozzi said that while buildings of varying heights and sizes can be tax-productive, "when you do low density, you’re essentially losing wealth.”
The consultant also encouraged city and county officials to work together going forward to address the region’s growth strategy. “It’s about looking at the whole system," he said. "Because you’re all in this together.”
Pictured: Map of taxable land value per acre in Grand Traverse County. Photo credit: Joe Minicozzi.