Monday, April 23, 2012

How to Make $39 Million Look Less Expensive

Wilonsky at the DMN prodded me with a tweet about the City's Complete Streets 15 Pilot Projects, with a total bill for implementation being $39 million and change.

The Better Block guys and I chased this project based on the idea of incrementalized costs. In that, the full implementation wouldn't be realized (or expensed) until there were cheap trial periods in all of them to acclimate the citizenry and businesses alike along the corridor. In effect, testing and proving up the designs. And therefore, allowing an adaptation phase where things could be tweaked.

The manner the city decided to take incorporated some of these ideas, but ultimately decided on a more conventional approach and we see that in the costs quoted, ranging from between $600K and $6M. Our point was that these costs would be easier to swallow not all at once but after seeing new business and investment buy into the idea of complete streets as sociopetal places that bring people together to hubs of social and economic activity rather than sociofugal, essentially commercial arterials which are truly hell on earth.

After reviewing the briefing here, I like many of the streets chosen. However, my point isn't about the expense, but rather how cheap that $39M number is when we reframe the conversation. Let's look at the Magnolia example in Fort Worth, where the TIF paid for restriping of the streets, narrowed the road and added parallel parking. What was a four-lane road, became two-lanes with a shared center turn lane, bike lanes on both sides, and parking. I'll have to verify the cost figures with Kevin from FortWorthology as he's been directly involved, but while I don't think it ran into the millions, the cost was offset by rise in property values (hence the TIF paying for the improvements) and afterwards by an increase in sales receipts.

The key numbers are here:
  • Property values in the Magnolia "Urban Village" (Fort Worth's nomenclature for their priority improvement areas) – 2004: $33.6 million – 2011: $79.6 million
  • Sales receipts jumped in the year after implementation from a little over $3million to over $10million along the Magnolia Street corridor.
Again, I'll have to verify these top-of-my-head numbers with Kevin, but the specifics aren't as important as the general gains. Between the $46M increase in property value and the $7M increase in sales receipts, the city is recouping their upfront costs and will continue to do so in perpetuity because of the increased taxable value and economic activity.

Imagine if we could achieve similar results with our fifteen selected streets? $46M times 15? That's a $690M bump in land value. $7M corridor sales receipt increase times 15? That's $105M. At 2.71% property tax and 1% local sales tax, that equates to the city generating $18.77M more in tax revenue each year along these corridors cumulatively. In other words, that $39M for implementation is paid back in 25 months. After that, it's straight cheddar.

Or, ya know, we could spend to build more highways and ship tax base out of the city proper and do economic development the old fashioned way. I prefer the Magnolia/Complete Streets model.

Of course, this means our fifteen would have to be executed as well as Magnolia in Fort Worth. Can we do that?