There is a major flaw in the argument advanced by John S. Adams in “Higher-end houses have a place and a role” (Opinion Exchange, April 12), and it would be unfortunate if his commentary informs discussions regarding required density at the Ford plant site in St. Paul.
Adams writes that the city of St. Paul should be approving high-end single-family homes along the river bluff at the Ford site because it will maximize needed property tax revenue for the city. He makes his case by comparing the average tax revenue generated by homes where he lives in southwest Minneapolis to average tax revenue from homes on a north Minneapolis block. This is to show that the bigger homes generate more tax revenue and, therefore, is what should occur along the Ford plant bluff.
However, tax-revenue comparisons among development types cannot be accurately made by comparing per-home averages alone; they should be based on revenue per common area of land. For a given number of acres, calculating for each development type the total number of homes and their combined tax generation would enable a more useful comparison.
To illustrate this point, consider the per-acreage tax amounts for the examples used by Adams. Adams’ 27-house southwest Minneapolis block generates taxes averaging $16,875 per home. Tax records show these homes take up 4.9 acres, so revenue is about $92,700 per acre.
County tax maps reveal that the southwest Minneapolis homes are on lots 50 % larger than those of north Minneapolis. Adams states that the north Minneapolis homes average $2,019 in taxes — 12 % of the Southwest home amount. But on a per-acre basis these homes generate $16,800 — 18 % of the Southwest homes. While the tax receipts are still much lower when the comparison is with north Minneapolis, this shows how the percentage difference changes considerably when the density of homes is factored in.
But forget the comparison with north Minneapolis; a city looking to generate maximum tax revenue really should be encouraging high-end apartments like those along the river in the St. Anthony Falls area of Minneapolis. As an example, owners of the Mill and Main rental property there are paying about $761,000 in property taxes on a site of 1.29 acres. This means taxes are $590,000 per acre — more than six times the per-acre taxes created by the single-family homes in southwest Minneapolis.
Of course, the real reason the city of St. Paul is approving the single-family homes is not because of their tax potential, but as an accommodation to neighbors of the Ford site who have been resisting density — regardless of the incomes of those who would occupy the housing. Adams’ errant logic only serves to mask the debate over the appropriate design for the Ford site as a proclaimed “21st Century Community.”
Chip Halbach, of Minneapolis, is semiretired and is a part-time housing consultant and volunteer.