The Newton Street Plaza Problem

The three owners of the Newton Street Plaza are proposing a housing complex.

According to research into the Costs of Community Services:

The average estimate ranges (for residential land development) from about 1.15 to 1.50, which means that for every dollar collected in taxes and non-tax revenue, between $1.15 and $1.50 gets returned in the form of local government and school district services.... 

According to the COCS studies, the largest single expenditure category for communities is the public school system, accounting for 61.4 percent of spending. Since open space and commercial development in themselves do not place any burden on the schools, it should not be surprising that their ratios are lower than those for the residential category.... 

If many homes in a community are in an extremely high price range and occupied by “empty nesters,” for example, the COCS ratio should be expected to be relatively low. On the other hand, low- or middle-income property occupied by families with numerous children would produce a higher ratio.

In short: this will increase the number of people who will require local services (schools, police, fire, roads, but mostly schools) without adding people paying local property taxes to offset those services. The owners will pay some property tax, and the residents' spending will add to the local economy, but not enough to offset anything.

What we have is a misalignment of incentives. The owners get to make money but not have to deal with the town's net deficit and overcrowded schools. Other than Yee, no one else lives in town. And unless he has children in the SH school system, he won't be affected by the increased load there.

I don't want to be anti-growth; I just want to be smart about it. I'd like to reduce the incentives for these types of residential developments and increase the incentives for tax-surplus developments (businesses and open spaces).

I. Discourage new rental housing (without skin in the game)

Any new multi family property development must be owned by someone with a kid in the SH school system. The idea is to create a disincentive for owners to invest in an arrangement in which they are not bearing the externalities. The largest local expenditure is schools; so they should have skin in the game.

This won't stop these developments or add more revenue, it will just force developers to have skin in the game. More consideration will be put into the whole process if they share the burden with the town.

Commercial/industrial space, or open land/agricultural space, can be left alone since the research shows that they are a net surplus on local government.

II. Offset Residential Development with Net Surplus Development

Encourage commercial growth
Others have argued that these structures must have a business on the first floor. That makes sense. According to the same research:

For commercial/industrial, the ratio usually ranges from 0.35 to 0.65, indicating that for every dollar collected, the local government provides only about 35 to 65 cents worth of services. For agriculture and open space, the ratios are only slightly smaller, usually ranging from 0.30 to 0.50.

How about this: a new residential development cannot be approved until a new commercial or open space development is approved. A really anxious owner can contribute to this project if they want to get their housing started.

Attract/Retain empty nesters
Empty nesters do not add to the school burden. We should do everything we can to attract and retain this population. They want low crime, low congestion, walkable communities, and probably a good senior living center. According to this: dog parks, lectures (hello MHC), community gardens, and low maintenance/high end homes are what retirees look for. Keep these options in mind.

More Parks?
Although it doesn't make intuitive sense, the research shows that developing a public park is a net benefit for a town. It doesn't add any revenue and has some expense for maintenance and probably police patrolling for loiterers.

But apparently it adds enough to property values to bring in more revenue. I couldn't be happier. I'm a huge proponent of more parks, a great source of social infrastructure.

How about this: the Newton Street Plaza owners pick up the tab on the proposed dog park. Or, they make annual payments to subsidize the municipal golf course.

Final thoughts
When you restrict housing, you inevitably price people out of the market. This is what is happening on a larger scale in our largest growing cities. Lower end housing isn't just poor people, it's often young people, struggling with student debt, supporting their families, and dealing with entry level pay. They should have their shot at the American dream too.

The population keeps growing; we need to build housing to keep up with it. So I propose a 1:1 new development ratio, a skin in the game requirement for residential developers, and incentives to keep/attract empty nesters.