Tax Revenue - The Truth: Residential VS Commercial Retail

The Kacin Council position on taxes has always been if we want to retain community as it is now then we will have to raise taxes. They says we need to a diverse tax base by bringing in retail commercial development in order
lower taxes. If this true why does a community like Monroeville, which is largely a retail commercial district, have 35% higher taxes than Murrysville?

If commercial development lowers taxes then Monroeville should be the gold standard. When was the last time you heard someone say they moved to Monroeville because of the tax savings?

Our School Board members like the idea which the Kacin Council presents because they feel this will bring more revenue for our school system. However, would you rather your children attend the Gateway School District over the Franklin Regional School District?

Tax studies have shown that developments similar to Marketplace on Twenty-Two generate less tax revenue than comparable residential or mixed-use development. A true economic impact study was never conducted by Council to determine the financial impact on the community with this type of development.

"Effective annual budgeting relies to a great extent on a long-term view of our community’s resources and needs. Murrysville is a wonderful community, boasting of many attractive features and services. It is the responsibility of Council to protect this legacy by protecting and maintaining these attractive qualities, while continuing to grow Murrysville in a positive and sustainable manner. We need to prioritize our spending so that our expenditures are consistent not only with the current demands of the community, but also the vision the community has for Murrysville.

All organizations require internal monitoring to ensure that they are operating at efficient levels. Government is no different, especially since the investment of taxpayers’ funds is a matter of public trust. It is the responsibility of government to make sure that tax payers' money is being spent efficiently and not wasted on inefficient or poor quality work." - by CPRM-PAC supported council candidate Jeff Kepler.
 

A Review of Tax Income from the GBOD Ordinance
and Proposed Development of “The Market Place on Twenty-Two”
 

Douglas Splitstone, wrote a long and extremely thorough analysis of tax income to the Municipality & F-R school system of having a "Market-Place-on-22" VS Residential Development on the former Buncher property. This analysis was prompted by the errors made in the slide presentation by Theo Van de Venne at the Council's Town Hall Meeting last summer. Neither Van de Venne, Larry Nicolette, who is a CPA, nor any other of the five council members who voted in favor of the GBDO seems to have the ability to assess which kinds of development are in the best interest of Murrysville

Introduction

On July 30, 2008 the Murrysville Municipal Council held a “Town Hall Meeting” to provide an educational opportunity for citizens and stakeholders related to Ordinance 771-08, the General Business Overlay District (GBOD). During that meeting a representative of Council made a Power Point presentation summarizing the Comprehensive Plan, the proposed GBOD ordinance and it’s potential impact on taxes and the budgets of the Municipality and the Franklin Regional School District (FRSD).

Slide 9 of that presentation indicates that 407 homes could be built within the area considered by the GBOD currently zoned R-R and R-2. Further, an estimated 407 homes would house 1,042 residents and it is estimated that 175 of those would be students of FRSD. The next bullet item on that slide suggests that $1,302,000 in tax revenue will accrue to FRSD and $336,000 in tax revenue will accrue to the Municipality under this residential building scenario.

To gain some insight as to what these number really imply, I have attempted to reconstruct the distribution of tax income across the various types of taxation employed by the Municipality and FRSD. Unfortunately, the Municipality’s budget summary lacks specificity in terms of tax income. However, the FRSD’s “Revenues for Expenditures” available as a part of their 2008-2009 Budget (FRSD, June 16, 2008) provides the detail needed to begin the investigation. The tax information in following table is extracted from that report.

To download the whole report please click here

D. E. Splitstone, Principal
Splitstone & Associates
August 30, 2008

Economic Impact the Overlay will have on the Murrysville Community
by: M. Kathleen Loeffert

Taxes:

2001 study of Concord, N.H.  by RKG Associates

Despite 2.8 million square feet new development over 12 years, town suffered a 19% decline in tax revenue and property taxes soared as a result

2004 study of 8 different Ohio communities by four different analysts

Retail development, especially Shopping Centers and Big Boxes, generated a net annual deficit of $0.44 per sq.ft.

Declining Tax Base is due, in part, to increased demand on public services, decreased property values due to traffic, noise and light pollution, and the dissolution of local businesses.

Local Businesses:

Not only do direct competitors suffers, but since local businesses tend to support other local businesses, support businesses such as local banks, attorneys, printers, web designers, suppliers, accountants, etc suffer as well.  Local businesses keep more of their profits within the community:

            54% local businesses revenues are respent instate

            14% large chains revenues are respent instate (most of which is payroll) 2002 study of Barnstable, MA by Tischler and Associates

            Big Box generated net annual deficit $468/1000sq.ft.

            Shopping Centers generated net annual deficit $314/1000sq.ft.

            Independent businesses generated net annual return $326/1000sq.ft.

Blight:

Article in Home Advantage, June 2008

            Retail vacancies are at a 12 year high

Estimate at year’s end there will be 1.2 billion sq. ft. or 40 sq. miles of empty retail space (city of Miami is 36 sq. miles)

2005 Evaluation of Columbus, Ohio found 70 empty big-box stores

“In their quest for market share, chains like Wal-Mart, Target, and Lowe’s have built far more retail space than the market can support.  Flooding towns with an excess of retail space make it easier to capsize small businesses and grab market shares from competing chains.”  Institute for Self-Reliance  ‘Big-Box Blight – The Spread of Dark Stores’, 2007

Traffic:

Institute of Transportation Engineers Trip Generation Manual estimates:

General Merchandise store (Target) generates 7,000-13,000 weekday vehicle trips

Home Improvement store (Lowes) generates 4,000-7,000 weekday vehicle trips

Total: 11,000-20,000 weekday vehicle trips (does not include any satellite stores or increased weekend traffic)

2006 study by G.M. Vivian in the ITE Journal reported that the Trip Generation Manual may underestimate traffic by up to 42% for larger ‘superstore’ big boxes

Home Improvement store can generate 35 tractor-trailer trips per day alone

Environment:

Health of the Turtle Creek Watershed:

Big box can require a 17 acre parking lot:

Every 1 acre of impermeable surface produces 25,000gallons of runoff during a one inch storm / one acre undeveloped land generates 2,700gallons of runoff during a one inch storm

12 acre parking lot produces 9 times the pollutants of a 12 acre field

Loss or Fragmentation of open spaces:

Each year 3.2 million acres of land are developed, or 365 acres per hour

Large increased demand on energy and water supplies

Air quality, light and noise pollution