by Joel Burgess

In 1994, the Washtenaw Land Trust ( WLT ) conducted a Cost of Community Services Study in Scio Township of Washtenaw Township (near Ann Arbor ), MI. WLT ‘s mission is to protect farmland, natural areas and open space. Washtenaw County was (and is) experiencing an increased demand for residential development. The study raised a couple of important questions: Does development pay for itself? Does developed land contribute enough in taxes to cover the cost of providing services?

These questions were re-raised last month by Barry Lonik, a consultant for the original study (of Treemore Ecology & Land Services Company ) , at a conference in Grand Rapids, MI. Grand Rapids and much of the rest of West Michigan has also seen an increased demand for residential development.

According to the study, proponents of residential development argue that having more houses and subdivisions leads to higher assessed land values and therefore more revenues for local governments. However, the findings show that residential development did not provide enough tax revenue compared to the services it required. In fact, for every one dollar received in tax revenue, the local government was shelling out $1.40. This was primarily due to the high cost of education.

By comparison, expenditures for agricultural land and commercial/industrial development were $0.62 & $0.26, respectively. Therefore, by virtue, agricultural lands and commercial/industrial facilities were subsidizing residential development.

Revenues Expenditures
Agriculture $1.00 $0.62
Commercial/Industrial $1.00 $0.26
Residential $1.00 $1.40

Source: Washtenaw Land Trust

Even though the study is dated, it once again confirms the importance of the manufacturing or industrial sector. As the pressures for housing continue to rise in many communities, an efficient, mixed industrial development (and to a lesser extent, commercial development) is critical to community sustainability.

In economic development terms, with the presence of downsizing and outsourcing in the manufacturing sector, economic development engines are more instrumental than ever, serving as the strategic drivers for job creation, target marketing, and financial performance to maintain sustainability. Local governments increasingly rely on ED engines to help shape and create development policies that will ultimately make or break a local economy.

Sources:

Washtenaw Land Trust, www.washtenawlandtrust.org

Barry Lonik, Treemore Ecology & Land Services