The "Per Acre" Method
What Do We Compare When We Shop For a Car?
When we shop for a car what do we look at to compare our options? What do we measure? What metrics do we look at to evaluate performance? The questions we ask and the metrics we chose vary depending on the most important factors. For example, if our main concern was range we would rank vehicles based on the distance they could travel on a single tank of fuel.
Fuel is a finite resource with an ever increasing cost. If we lived in a dangerous post-apocalyptic society, à la The Road Warrior, range might be our chief concern. That’s a world where you just don’t want to run out of gas, ever. You might also be more concerned with outrunning and out-ranging armor-clad marauders.
If our main concern was making it across the atomic wasteland without getting stranded, an armored Mack R600 series complete with cow-catcher would be our best bet. Most of us, though, live in a different kind of dystopia where making it across a radioactive wasteland is less a concern than making it through the year without going too far into debt.
Fuel is the limited resource and the important consideration is choosing a vehicle that won’t punish your pocketbook. We ask not how far can it go on a single tank of gas but how far it can go on a single gallon of gas? In the post-war era, until the 1970’s, advertising for cars tended not to ask this question. Gas was so inexpensive that the more relevant question was how long you could go without filling up. After the gas crises of the 1970’s fuel economy became the relevant question.
Total Value vs. Value per Acre
How does this relate to cities? The life blood of a local government’s budget is property taxes. Much like cars before the 70’s, we have inherited an outdated metric for measuring the productivity of development. We tend to focus on the total value of real estate and the total tax production while ignoring land consumption and space. This is tantamount to buying a car based on its range or assuming that land is an infinite resource. Developable land, like petroleum, is not an infinite resource. It is limited by municipal boundaries and more importantly by the cost to make it developable.
Much as a physician uses a variety of tools to explore the inner workings of the body, we incorporate a variety of graphic tools to better understand and explain the economic patterns in a community. The first instinct in evaluating the relative performance of different properties, neighborhoods, and development types is to visualize the total property tax assessment. What this misses is the impact of land consumption and comparative tax production efficiency. Just as measuring “miles per tank” is an accurate but not particularly useful metric tax value per property reveals little about the pattern of development.
In this example, we take a “miles per gallon” approach and normalize value by the space it consumes. The warmer shades represent greater tax value per hectare and the grey areas produce no taxes. The resulting map illustrates the pattern of efficient tax production. By analyzing this pattern we begin to see how development choices and other factors such as proximity to downtown impact value.