Tax Base Needs to be Built upon a Balance of Land Uses
In 1999 the Sarasota Board of County Commissioners and the Economic Development Board commissioned Tischler & Associates Inc. to conduct an economic and fiscal impact analysis for 19 prototypical Sarasota County land uses. The economic impact analysis measures broad impacts to the general economy, and the fiscal impact analysis determines the cost and revenues from new development on the County budget.
The report concluded that most forms of residential development are likely to generate budget deficits. The report’s findings suggested that developing residential homes from vacant land produced a net tax loss, despite an increase in gross tax revenues. Ultimately the cost of infrastructure and services required by the new residential development exceeds the increased tax revenues they generated. The report also concluded that many forms of commercial development, high-end residential development and agriculture produced a net tax benefit to the County budget.
When the report was issued in February of 2000, many in the residential development industry feared the Tischler report would be misinterpreted and misused by government officials and anti-growth advocates as a means to stop growth. In response to these fears, I published a guest column in this paper that suggested the report’s conclusions should not to be used as a single factor to determine whether development should be approved or what kind of development should be approved. Instead, the information should be used as a tool, along with many other tools available to the community, to support an appropriate rate, form and amount of new development.
Last week two separate groups with completely different positions asked me: What has been done with the Tischler report? Has the County used the report’s findings to influence development decisions? Or has the report found a comfortable place on that notorious government shelf where it will forever remain dormant, dust-covered and unused?
I believe that the Tischler report has influenced both non-governmental initiatives and numerous, though not all, Board of County Commission development decisions.
While the Tischler report and many others studies have demonstrated a potential net negative fiscal impact for many forms of residential development, a decision to approve only “profitable” forms of development isn’t that simple. Unlike a for-profit corporation, government’s role often is to provide services that are not profit centers, such as indigent health care, national security and education.
One of the main reasons that many forms of residential development don’t “pay their own way” is schools. Residential development that doesn’t generate school age children was found to produce a net tax benefit. Conversely, most homes priced in the affordable and workforce price ranges produce net tax revenue losses. Then are we to approve only childless and million dollar homes? I can only speak for myself, but that is not the kind of community that I want to live in and it certainly isn’t the standard that has made Sarasota the community that it is today.
Managing a viable community involves a great deal more than one economic measurement of profit and loss. A tax base built upon a balance of various land uses is an essential for a stable economy and a livable community. This balance often requires using revenue from one land use to support another.
That is not to say the Tischler report has been ignored – it has not. The report provided additional evidence that the County needs to diversify its ad valorem tax base, to reduce its dependence on residential properties. The County also refocused its economic development strategies based upon this finding. Non-polluting “export” industries with high paying jobs have become the target for economic development policies, replacing a priority on tourism and housing development industries.
Additionally most elected officials now realize that growth, simply for the sake of adding properties to the tax role is not a sound reason to approve development. It may have been valid at one time, or under different funding scenarios, but not anymore. Today’s development should be scrutinized at a higher level that includes a comprehensive balance of benefits and responsibilities.