Value Per Acre Analysis: A How-To For Beginners
One of the key principles underlying the Strong Towns mission is the following:
Land is the base resource from which community prosperity is built and sustained. It must not be squandered.
A strong city or town needs to make sure that its land use is productive: that is, that the activity taking place on that city's land is creating enough wealth to support the infrastructure and services needed for that place to continue to exist and thrive.
But far too few places actually do that math. And when you do it, you often find things that run counter to conventional wisdom about where your city's wealth is coming from.
An image from Chuck Marohn’s classic “Taco John’s” case study
That's what happened when our founder and president, Chuck Marohn, decided to compare the value of the businesses on a supposedly "old and blighted" block of his hometown to that of a "shiny and new" Taco John's restaurant only two blocks away. He demonstrated that the run-down strip of businesses built in a traditional, pre-automobile form was worth 41% more than the fast-food joint, which the city had courted and even bestowed a Tax Increment Financing subsidy upon in order to land.
What Chuck did was something simple but important: he looked at the value per acre of land. This is comparable to measuring the fuel efficiency of your car in terms of miles per gallon—which is meaningful—rather than miles per tank, which isn't, since tank capacity varies from one vehicle to another. Value per acre is a measure of your town's land-use efficiency.
I constantly hear from readers who want to do a Taco John's-style analysis in their own town—for example, to share with skeptical officials who won't be convinced until they see a local example.
So if you're not a data nerd like me or Chuck, but you want to be able to do this kind of comparison, here's a step by step guide to conducting a basic one:
1. Choose an Appropriate Comparison
Think about the point you're hoping to make or the question you're hoping to answer. Then think about how you would conduct as close as possible to a controlled, scientific examination of that question. Your goal is an apples-to-apples comparison, so that you can focus on the differences which are significant to the story you want to tell.
When Chuck wrote his Taco John's piece, he made sure to compare two blocks that were on the same street in the same city, thus controlling for a number of possible variables. For example, both blocks were served by a roughly equivalent amount of infrastructure—square feet of pavement, linear feet of water and sewer main, etc.
Since both blocks were in the same neighborhood, the surrounding demographics also could not be a factor in explaining the difference in value. If, on the other hand, you were to compare a residential area in a poor city to one in an affluent suburb, and you find higher value per acre in the suburban setting, does that tell you anything about the development pattern? Or does it just tell you that the people in the suburb are much wealthier and their homes are nicer and more expensive—so much more so than it overshadows any difference due to development pattern?
Compare apples to apples—not in every single way, necessarily, but enough that it allows your audience to focus on the story you hope to tell.
In Defense of the Humble Taco
For my choice of example, I have a score to settle with Chuck. For ever since he cast Taco John's in the role of value-per-acre villain, the Strong Towns world has been waiting anxiously. They wait for someone—anyone at all who appreciates the small, unpretentious, yet nearly infinitely versatile culinary marvel that is the taco—to come to the defense of taco-joint-kind.
Enter our hero: Taco Taxi, 1511 East Lake Street, Minneapolis, Minnesota:
Playing Goliath to Taco Taxi's David, we have the Lake Street Target, half a mile to the east along the same busy urban stroad:
The question I'm interested in is the relative value to a city's tax base of big-box retail versus small independent businesses. Alright, Minneapolis, let's see what you've got.
2. Find the property value data.
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In the United States, property information—including ownership, assessed value, and tax records—is generally maintained at the county level, not the city level. If you Google the name of the county you live in, along with "property" or "parcel," you will most likely find what you're looking for. (Some rural counties may still not have all of this information in an online, searchable database, but that scenario is increasingly rare.)
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You'll probably get to a page that looks like the accompanying screenshot. The exact options available to you may vary. Most large urban counties will have a searchable map. Some let you search by owner's name; others do not, in which case you'll need the exact address of the property you're interested in.
We're going to use the map search.
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The map viewer for Hennepin County, MN looks like this. If you zoom in enough, you’ll begin to see the outlines of individual parcels of property. You can also click the “Map Layers” button on the top right to change the underlying view to a Satellite photo, which will make it easier to find what you’re looking for.
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Depending on where you are, the layout may be different and some of these features may not be present.
In the map below, I’ve zoomed in on the Target store I’m interested in, and clicked on it to highlight the parcel. The property record pops up in an inset window at the left.
You can also click through to the info on a separate page. Here's the record for the Target store and parking lot, which is owned by the Thomas Burton Trust, but lists Target Corporation as the taxpayer. Here is a link to the Taco Taxi building's property record. The same one-story building also contains a luggage store called Las Petacas. It is owned by Saldi, LLC.
3. Understand what the numbers you're seeing mean.
The value of real estate is somewhat a function of educated guesswork: cities and counties use complicated assessment formulas to determine the value of a property for tax purposes. It's not a very scientific estimate or carefully tailored to the individual building—it's not meant to be as accurate as what a private appraisal would come up with. Assessment is meant to ensure a fair, equitable tax burden across a neighborhood or city. Sometime the assessed value closely approximates what a property would actually sell for if placed on the market; other times it's significantly over or under.
Depending on where you live, these formulas may be very different. You may see a distinction in the property records between Estimated Market Value (EMV) or Just Value, and Assessed or Taxable Value. This can happen if, for example, your jurisdiction caps the amount that assessed values may increase per year. In Florida, where I live, that cap is set at 3% for owner-occupied ("homesteaded") residential properties, so if the market value of your house increases by more than 3% in a year, that will be reflected in the Just Value, but the Assessed Value will be lower.
Most likely, you will see multiple assessed property values: for land, improvements (or building), and combined. We want the combined value, for most purposes.
Another way to compare properties is by actual taxes paid. But be aware that property tax formulas can be fiendishly complex. There might be different rates for different types of properties—commercial versus residential, for example. There might be weird exemptions. There might be somewhat opaque multipliers. You will be able to see the total tax bill for a property from the public records, but you likely won't know quite how that number was arrived at.
In the case of our Minneapolis comparison, the property records show us that the Lake Street Target is assessed at $9,000,000 and paid $364,955.28 in taxes in 2018. The building containing Taco Taxi and Las Petacas is worth $295,000 and paid $11,075 in taxes.
4. Find the area of the property.
If you're lucky, this will be right there in the data set. It is for Hennepin County: the Target property is 9.76 acres, and the TacoTaxi property is 0.10 acres.
What if they don’t provide the area?
If it's not recorded, and you don't have access to GIS software, the worst case is still not bad: you can use Google Maps. To do this, go to Google MyMaps. You will need a Google account. Create a new map, and zoom to your location. You can click “Base Map” in the panel on the left to show a satellite photo or various other map styles as the underlying image:
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Then, using the drawing toolbar on the top, select "Add line or shape." By comparing the outline you trace with your county's property records map, you should be able to trace very close to the actual boundaries of the parcel in question. Make sure you check whether adjacent parking lots, etc. are part of a given piece of property.
My rough attempt came out at an area of 0.11 acres for TacoTaxi and 10.0 for Target—versus what I know to be the actual values of 0.10 and 9.76.
5. Do the math!
Add up the value of all the parcels you want to include in your average, if there's more than one. Divide by the total land area. That's your value per acre.
You can do the same for the tax liability.
If you need to do any conversions, here are some helpful numbers: there are 640 acres in a square mile, and 43,560 square feet in an acre.
6. Present the results.
Use your preferred graphics program (for simple, quick visual aids, I like Google Drive’s PowerPoint knock-off, Google Slides) to lay out a nice side-by-side comparison, like this one:
Import the photos to Google Slides, and arrange on the page with your text. When you’re done, go to File —> Download to save the slide as an image.
What if I want to do this at a bigger scale?
An increasing number of cities and counties have online, interactive mapping portals for viewing government data. These can be quite sophisticated. As a rule, Google "[your city or county's name here] gis" or "[your city or county's name here] open data" and see what comes up.
I’m not going to go into great how-to detail here, because these interactive maps provide a lot of options from the simple to the quite complicated.
Here's what Hennepin County's portal looks like. It lets us choose which data to present on the map, and to mess with the visual representation of the data via colors and symbols. For example, I've set this map to display total value divided by acreage on a sliding scale from light green to dark blue. I manually edited the image to put an orange border around Taco Taxi and Target:
You can see right away that Taco Taxi is not an anomaly: a number of the small commercial parcels lining East Lake Street are shaded the same dark blue, representing a very high tax value per acre.
This map viewer is great for exploring all sorts of public data about the city, but it’s very slow, and it's extremely limited in the number of data records it can display at once. If I try to view value per acre for all of the county, or all of Minneapolis, rather than a neighborhood, it doesn’t color-code all of the properties, instead resulting in a weird and useless patchwork:
If you want to make maps of value per acre across entire cities, like the ones that geoanalytics firm Urban3 makes, it's not that hard to do—the data is almost always available and the math is simple—but your best bet is to get yourself a GIS program and learn to use it. ArcGIS, the industry standard, can be expensive, but there are cheap and free alternatives.
Often, however, you can make the point you want to make without Big Data, by choosing the right small data.
Taco Taxi versus Target was one comparison between two very unalike places, but I could have chosen any of dozens of small businesses along the same stretch of Lake Street as Taco Taxi and found a similar value per acre—one that would also blow Target and its hundreds of parking spaces out of the water. A city full of Taco Taxi-style development would be a more productive city, and this side-by-side comparison is intended to suggest that.
Where are the most productive places in your city? Where are the surprising juxtapositions in your city, or places that are more or less valuable to the tax base than conventional wisdom would suggest? If you've never done this kind of value-per-acre comparison, try it out and let us know what you find.
Happy mapping!
If cities cared about traffic deaths, we would witness them taking an urgent response to crashes, and we would see city halls tracking traffic deaths in real time, because a new fatal crash would mobilize people.