Sprawl Information Center
September 19, 2005

SUBURBONOMICS: HARNESSING LAND VALUES TO TRANSFORM SPRAWL

by Jeffery J. Smith

Video images from a time-lapse camera orbiting Earth would show cities
erupting, spilling onto farmland, emptying out their cores. A close-up
would reveal cities infested by the car virus; the urban cell membrane
dissolves, leaking out human habitat. The alert eye would spot a basic
cause: underutilized lots, the spoor of speculation. Harland
Bartholomew, while doing work for the U.S. government in 1955 -- about
the time suburbia erupted -- found that over one quarter of urban
surface area was vacant or otherwise under used. Much of the idle land
reflected the patience of owners. Rather than put their site to its
best use, some waited for its value to rise -- as near to a sure thing
as one can get in a fast-growing region.

Speculation left its imprint upon metropolitan form. City sites
withheld for future profit were not available for present use. So,
exurbanites resettled upon nearby open space. Voila, suburbanization.
According to Bill Batt, a retired professor and former tax researcher
for the New York legislature, "forcing development to flow around
vacant lots leaves an area pockmarked with invisible buttes,
unbuildable upon until the owner, lord-like, gives his assent."

Ironically, it's not lone owners who generate the value of land but
the surrounding community. While society may have a feeble claim to
many of the things it taxes, the value of locations is precisely what
society should not forgo. By leaving land value in private pockets we
privatize publicly-created values -- a "giving" every bit as unjust as
any "taking". Had society been collecting its own all along, "suburbia
may never have been spewed forth in the first place," observes Batt.

Instead of taxing land alone, most localities tax property, of which
the most valuable part is the building. The better the building, the
higher the tax. The worse the building, the lower the tax. Some
architects argue -- Frank Lloyd Wright argued strenuously -- for
taxing just sites, not structures.

Speculators, of course, lean the other way. Under the current regime,
they can lower their tax liability by deferring maintenance, thereby
lowering the value of their buildings. In poor neighborhoods, the
conventional property tax induces slums. In better off areas, it
rewards speculation. "While the property tax generates a centrifugal
force, site value taxation (SVT) creates a centripetal force, easing
the development pressure on suburbs," explains Batt. To pay the SVT,
owners put their parcels to better use. Owners of the most valuable
sites, having to pay the most tax, are the ones most eager to attract
development. Since the most valuable lots lie about the center, it is
the center which draws development. In-fill happens. Seattle's
Northwest Environment Watch calls SVT the "sprawl tax." In theory, it
could contain -- even reverse -- sprawl.

Using data from Boston, Dr. Joseph DiMasi constructed a model that
replaced the conventional property tax with one that taxed land at
three times the rate as buildings. Development along the outer ring
contracted toward the central business district by more than half a
mile (summary from Rick Rybeck, researcher for the City of Washington,
DC).

Owners of the most valuable sites, having to pay the most tax, are the
ones most eager to attract development. Since the most valuable lots
lie about the center, it is the center which draws development. In-
fill happens.

In practice, some jurisdictions already do exempt improvements and tax
only locations. Johannesburg, South Africa, is one such city. It
enjoys the fastest site recycling rate in the world. By keeping sites
at their best use, they keep development from wasting peripheral,
undeveloped land.

In Australia (whose capital is built on publicly leased land), Sydney
taxes land alone, Melbourne taxes land and buildings. Around
Melbourne, half the suburbs tax land alone, half don't. Those that do,
found Dr. Kenneth Lusht of Pennsylvania State University, have 50
percent more built value per acre of those that don't. On levied land,
untaxed buildings come bigger and better.

In the U.S., Pittsburgh levies a much higher rate on land than on
buildings. For its low housing costs and low, low crime rate, Rand-
McNally has rated the Steel City "America's Most Livable" twice.
Livable cities not only make few exurbanites, they also make a good
model for neighbors. Taxing land, not buildings, also counters the
impact of automobiles on settlement patterns. To date, getting about
in sprawl has meant driving. Such dependency has kept suburban
transformation trussed up. Were we to cut this Gordian knot, the car
count would drop. Then we could de-pave and revive some land,
hospitable again to nature and man.

SVT helps people out of cars in two ways. First, by densifying a city,
it provides more riders for mass transit. Carrying more fares, the
system can add routes and rides for residents. Consultant Tom Gihring,
formerly at Portland State University, adds, "a convenient alternative
to cars would weaken their stranglehold on suburban form." A drop in
traffic would let bicyclists take back more of the street from
automobiles, as well. Second, sedated by the property tax, some sites
now languish as parking lots. SVT spurs owners of strip malls and
cluster malls to find other uses for their asphalt aprons. "As in days
gone by, stores might fill the streets with delivery vans," offers
Gihring, author of The Journal of the American Planning Association's
first article on revenue reform (1999 Winter). While parking grows
scarce, and thus expensive, and as transit becomes convenient while
remaining a bargain, people will switch from driving to riding. "If
not phoning in their order, shoppers could dial a ride, walk, or
pedal, besides take a bus," Gihring says.

All love affairs, even those with two tons of gleaming steel, must
eventually end -- but not necessarily in heartbreak or cardiac arrest.
Cars are fattening. Living car-free is to live carefree, actively,
healthfully, and perhaps with a more discerning sense of esthetics.

No longer needing those car-first, keep-out-snout houses, "Owners
might lavish more love upon habitats that put their human occupants
first," adds Gihring, who worked on a Seattle housing project design
that won the APA's 1999 National Award. With reclaiming more of the
house for people, owners may release more of the yard to native
wildlife. Under SVT, owners of large, valuable lots would owe more. To
trim their liability, some might agree to trim off an edge of their
lot.

In exchange for these strips of land, the jurisdiction could pay an
annuity from collected site rents, thus avoiding any out-of-pocket
expense. As these swaps become numerous, the locality could stitch
together these shavings into bike paths, hiking trails, or wildlife
corridors, planting a double hedgerow alongside. Besides having a
loyal dog patrol the yard, and maybe a stray raccoon visit at night,
split-level dwellers could share terrain with wild fox and rabbit.

In many places, site values are so high and still rising that were the
jurisdiction to collect them, it could fund not only infrastructure
and basic social services, it could even abolish other taxes -- and
still have a surplus to rebate as a per capita dividend to residents.
Batt found that a nine-mile stretch of interstate cost $125 million in
1995 dollars, yet added $36 billion in value to the land within two
miles of the highway. "Imagine receiving a share of the worth of the
earth occupied by one's community," muses Batt. He continues, "Could
we expect more gratitude toward nature and more civility to
neighbors?" Just as privatized rents dispersed exurbanites into
suburbia, perhaps shared rent can turn suburbanites into sensitive
dwellers in the land.

While we do raze blocks for freeways, are we prepared to close blocks
to traffic, to free streams from culverts? Transforming suburbia is
not as simple as accommodating the amateur redecorator who, after
several patience-trying moves, decides the sofa does go best over
there after all. Conceivably, it could be as involved as moving the
extra ranch home out to a ranch, the misplaced town home in to town.
Wholesale restructuring of suburbia cannot be done by planners alone.
Batt says, "mixing in other modes of transportation, other uses of
land, must be the choice of residents. Although consumer preference
alone did not create the 'burbs -- choices were limited and weighted
-- it can, with wise policy, transform this compromise between city
and country."

Currently, there is little cost associated with holding land out of
use. We could, however make the cost dear. Doing so would place the
full weight of the market on the planner's side. As a growing number
of ranch homesteaders vote against growth, they may soon have the
chance to vote for the anti-sprawl SVT. Pushing the reform from
cutting edge to mainstream are the Sierra Club, Friends of the Earth,
writer James Howard Kunstler, and a host of others. They offer SVT as
a way to "smart growth" which would change the face of suburbia. For
going on ten millennia, farms have provided food and cities trade.
Might suburbs, places for sleeping at night and gardening on weekends,
last even a century? Film from our orbiting camera shot in the future
might show the suburban lava sprawling farther still, or it might
capture the suburbs receding, ghostlike. Or, it might render the metro
region transformed into a healed central city with a ring of vibrant
satellite urblings, like moons around a planet, adhering to a course
set by the fair flow of the value of land.

This article appears courtesy of Common Ground-U.S.A.