Did you know that Localz in Ladner pays 7x more taxes than McDonald’s does?
Did you know that the Stir Coffee building in Ladner Village contributes 3.5x more tax revenue per acre than the Save-on-Foods complex on Ladner Trunk?
Did you know that the Billie’s Barbershop and Buttercups Children’s Boutique building in the Village generates 3x more tax revenue per acre than the Trenant Park Square on Ladner Trunk?
Did you know that Il Posto pays 2.7x more tax than the Triple O’s/Chevron on Ladner Trunk and 3.5x more than the Tim Hortons on Ladner Trunk?
Hiding in Plain Sight
The reason why this imbalance in taxation is not more widely known is that it is hidden. It is hidden by the fact that we normally look at the total tax bill of the property owners in our City (if you’re a goofball like me who looks at tax bills).
In the conventional way of viewing the world, the $468,000 in property taxes that were paid by the owners of Trenant Park Square dwarfs the $27,000 paid by the owners of the Billie’s and Buttercups building. Similarly, the $55,000 that Mcdonald’s in Ladner paid is more than the $33,000 paid by the owner of the Localz Cafe building.
One might reasonably conclude that the guy who wrote the first four paragraphs of this post should be fired for such a misleading beginning. He needs to go back to municipal property tax college to brush up on the basics, right?
We normally look at the total tax bill. Big properties pay big bills and that’s what makes our city’s finance department happy. Right?
We should take one additional step to assess the contributions of our property owners in order to have a productive conversation about growth and value in our city.
We need to break that bill down by the amount of land that each property takes up.
This step is very simple.
This allows us to find out how much tax revenue is generated per acre.
Localz Cafe sits on a 0.11 acre lot that includes the cafe on the ground level and offices above it and the property owner pays an annual property tax bill of $33,241 which works out to $302,190/acre.
By comparison, McDonald’s sits on a 1.36 acre lot and pays an annual property tax bill of $55,473 which works out to $40,788/acre.
How is this possible?
This discounting of land used by cars is the most significant subsidy that we provide to cars in our cities
We counter-productively discount the value of land used for automobile passage and storage.
This is the most significant subsidy that we provide to car owners in our cities. We require excessive amounts of land to be dedicated to the passage and storage of automobiles and we make up for that requirement by drastically under-taxing the land used for that purpose. If we taxed spaces for cars more equitably, that cost would mean that the price to shop at an auto-oriented store would be more fairly comparable to the cost for the shop that doesn’t use vast amounts of space to prioritize service for car-bound folks. Currently, the system rewards auto-oriented development by discounting land for auto passage and storage. This is the most lucrative subsidy out there.
A walk-up coffee shop sits in a spot where customers can access it by bus, bike, wheelchair, scooter, on foot, or in their cars. Instead of a drive-thru it has a street patio. Instead of a single storey building, it has a second storey of offices and in return it gets to pay 7x the property taxes that an auto-oriented fast-food chain with much higher sales income does! Talk about a skewed incentive system!
1. A Cafe Making the Most of Its Parcel of Land
When the property assessors from BC Assessment calculate the value of Localz Cafe they factor in the productive uses of the buildings that occupy the majority of the lot. As a consequence, the value per acre of this lot is quite high ($34.7 million/acre) because the property is almost entirely used for productive uses.
2. Ladner’s Not So Golden Arches
Meanwhile, the McDonald’s on Ladner Trunk Rd is assessed at a much lower rate per acre ($4.6 million/acre) even though it is located close to the Ladner transit hub and at the crossroads of Ladner Trunk & Harvest Drive. The property, as you will discover, is taken up with a lot of space for automobile passage and storage and this parking lot space is assessed at a very low value. Only a relatively small portion of the property is productive and the remainder is used for automobiles and nominal greenspace. The consequence of assessing these portions of the property at such a low rate is that it has incentivized businesses to develop land in a marginally productive way instead of making the most use of any given parcel of land. This problem is amplified when “prime land” like the site of the McDonald’s is given over to such a state of marginal use.
3. Xs and Triple O’s
Just for fun, let’s compare two Triple O’s. It’s one thing for the Triple O’s located at the connection of Hwy 99 and Ladner Trunk Rd. to be used for marginally productive use. It’s out in the middle of a rural area and the services provided to it by the city are much lower than in built-up areas. This Triple O’s & Chevron station is assessed at $4.75 million and it paid taxes at a rate of $41,541/acre on its 0.92 acre site. Much of its site is taken up by car passage and storage space. By comparison, the Ladner Triple O’s & Chevron that many were so happy to see open up on Ladner Trunk Rd. was assessed at $6.48 million/acre and taxed at a rate of $56,370/acre. Yes, it contributes a little more financially to the city than its rural peer but not much more! Imagine how much more financially beneficial this site would be if we expected the owners of the property to be as financially productive with their property as the owners of the Stir building are with theirs ($21.7 million/acre).
4. Ladner’s Strip Malls
You can see this over and over again in Ladner, Tsawwassen and North Delta. Our assessment formula discounts the value of land for auto-oriented properties like the Trenant Park Square ($5.5 million/acre) and Ladner Centre ($6.1 million/acre). The assessment process assumes, rightly, that very little productive benefit is available to the property owners for the space occupied by automobiles.
Foregoing Revenues from Better Land Use
Our blithe acceptance of such a disparity in tax revenue per acre really raises questions about our interest in having everyone “pay their fair share” in our city.
Our willingness to prioritize automobile movement and storage space over other uses is bankrupting us by draining us of the revenues our city could be earning.
(I will come back with a follow-up post about our path to bankruptcy as a city in the New Year – wait for it or check out this article about the path Winnipeg is on as a way to get the party started early on this topic)
Is this really what we want in Delta?
The productive use of land is one of the most significant factors in the solvency or financial well-being of our city. This is particularly true when it comes to commercial and industrial uses of land because these are the key economic drivers in our city that produce wealth, provide employment, and serve to circulate wealth. Without these sites of concentrated productivity, Delta would be a pretty bleak place to live.
The productive use of land directly impacts the types of services and supports that the City of Delta can provide to all the residents and businesses within our municipal borders.
Furthermore, it sets up the conditions for us to financially afford to set aside lands for agriculture, recreation, and ecological stewardship. The decisions we make impact the animals in our animal shelters, the birds in our trees, the salmon in our streams, the herons in our fields, and the eagles on our shores.
The City of Delta is unlikely to see any new land added to its borders unless the happy day comes when Point Roberts is annexed by the City (won’t that be grand! 1812 all over again!). This means that we are not going to see an increase in tax revenues from an increase in the geographic size of our city.
This means that our best option for improving the quality of life for birds, bees, trees, you’s and me’s in our city is through the careful use of productive lands. We can afford to leave green fields in a natural state if we ensure that we make good use of the built environment. We can afford to build more parks, plant more trees, establish better stormwater rain gardens, connect more by public transit, and care for our most vulnerable citizens if we can raise the revenue for it.
We need to think about ways to increase our use of productive land in ways that generate revenues for the city so that city services can create the conditions for prosperity among residents and businesses here.
(I will have a follow-up post on this essential connection between city revenues, the cultivation of prosperity in the city, and the conservation of natural ecosystems. If you’re curious, check out Jane Jacobs on this topic or a summary of Jane Jacobs’ work on this before my post comes out.)
You can think of it this way: if we currently squeeze more economic value out of dozens of 0.11 acre properties in Ladner Village than we do out of the rest of the land in Ladner, maybe we should rethink our approach to city building! Maybe we need to rethink our zoning standards that perpetuate auto-dependency and discourage auto-optional living.
Maybe we need to stop doing the following things:
- Incentivizing Marginal Use of Prime Land
- Discouraging Compact Development Through Flawed Zoning Requirements
- Dissuading Property Owners From Improving Their Properties
- Removing Incentives to Add Height to Existing Buildings or Properties
- Increasing the Amount We Spend to Service the Properties in Our Urban Boundaries
- Diminishing the Amount of Variety We Could Be Enjoying
- Exasperating Business Owners Who Would Consider Adding Secondary Commercial Uses on Their Site
- Contributing to Social Dysfunction, Hyper-Tension and Obesity
To Be Continued
I will write a lot more on this topic because it is one of the most significant issues facing our city and its citizens. I hope that I’ve set off an alarm bell or two. Check back again or sign up as a blog subscriber to receive notifications each time a new post on these and other topics gets posted!
Rebuilding Trenant Park Square in Our Minds
I want you to think about the implications of the reality we find ourselves in – a reality in which the 10 acres of prime Ladner real estate taken up by Trenant Park Square Mall (which is a great place that I go to often) contributes only 16% as much tax revenue to our city and its citizens compared to the Localz property. 16%!
If Trenant Park were built out in the old way – in the traditional development pattern – with 30% of its land devoted to passageways and streets that were public property and available for public decision making, it would still contribute over $2 million annually to our city and its citizens! Instead, we have another revenue-sacrificing tribute to the automobile-oriented consumer and it costs us $1.6 million annually in foregone revenues. Ouch. That’s on one site of 10 acres. I could go on with hundreds of more examples.
So, the next time that you walk to Stir Coffee or grab a bite at Localz or visit Billie’s Barbershop or admire an arrangement at The Flower Shop in the Village (or Sonia’s Flowers) or chat with your MLA or MP, just remember that you’re in one of the districts of Delta that generates the most revenue per acre within the City of Delta. Asking an area to contribute more to the bottom line of the City doesn’t have to be all that disruptive – it just means we need to learn from the past and undo the damage of the last 70 years.
Smarter People Saying Smarter Things Than Me on This Topic
Strong Towns – We measure car value based on miles per gallon, not miles per tank. Why don’t we do the same for our cities’ developments?
- “Our problem is not a lack of growth, it’s a lack of productive development that grows wealth over time. The solution is to prioritize development that is measurably productive.”
Dear Winnipeg – He Ain’t Nimby, He’s My Brother
- (This post the most impactful piece I’ve read on the ways that we need to see how adding people to neighbourhoods is a major benefit in neighbourhoods that pre-existed the automobile and/or have been developed with intentionality to be car-optional. This is one of the most humane pieces on the rational reasons one might have for opposing beneficial changes to a neighbourhood on the grounds that the auto-oriented lifestyle can’t cope well with change and intensification).
“If your neighbourhood is built in such a way that you have no choice but to drive to everything you need, from going to work, to getting groceries, dropping the kids off at school, etc., then more housing DOES mean more cars….It’s quite easy to see why NIMBYs react to infill in their neighbourhoods the way they do: it’s simply a product of how their neighbourhood was developed.
“But let’s look at how the incentives line up in a walkable, mixed-use neighbourhood instead. In such a neighbourhood, many people don’t need to own a car, nevermind two or three, since they can get to mostly everything they need within a 20-minute walk/bike. So, in this neighbourhood, more housing really does just mean more people, not more cars. More people to maybe be friends with, more people to pay taxes to support the local city services you want, more people to help support the businesses you already have, and more people to help attract the businesses you want to have. [I’m looking at you Any-Brewpub-That-Wants-To-Setup-In-My-Hood!]”
Dear Winnipeg – Developers are Salespeople Too
- Do you wonder how it got to be this way?
Dear Winnipeg – A Neighbourhood Full of Illegals
- Do you wonder how we’ve zoned our way into this predicament?
Strong Towns – The Numbers Don’t Lie
- “To have enduring prosperity, a community cannot squander its land; it must develop in ways that are financially productive.”
Andrew Price – Greenspace
- “Greenspace exists as a buffer against the outside world. The public realm of autoburbia is pretty ugly. Most people do not want to see or hear a highway from their building, and so they set it back. Once you set your building back, you need to fill it with something.”
Andrew Price – Places and Non-Places
- “Places are for people. Places are destinations that a person would go out of their way to purposely visit. Whether it’s a place to sleep, a place to shop, a place of employment, a place for entertainment, or simply a place to relax – it has a purpose and adds value to a city. Building interiors are the most popular common types of places found in cities.”
Strong Towns – Why Green Space is Different from a Park
How can I calculate tax revenue per acre in Delta?
Step 1: Get the address of a property you want to investigate (your own house perhaps?)
Step 2: Visit Zealty.ca and select the property in order to see how large the property is (in acres)
Step 3: Visit Delta Online – PIP and select the property in order to see its 2020 assessment value and 2020 taxes.
Step 4: Calculate value per acre (Assessment value ÷ acreage = value per acre)
Step 5: Calculate tax revenue per acre (taxes ÷ acreage = tax revenue per acre)
If you try it out, let me know what you discover! Email me at firstname.lastname@example.org or leave a comment below. I’d be thrilled to hear your insights into what you learned through this!