Study: Santa Rosa land-use policy overlooks tax potential

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SANTA ROSA — Sonoma County’s largest city has several square miles of parking lots that provide little in the way of critically needed municipal revenue, one example of how the city’s land-use policies are leaving a lot of money in the ground by not maximizing property and sales taxes per acre, according to an urban designer who unveiled details of a city-backed pilot study.

“What our study shows is the inherently higher per-acre value of inner-city, mixed-use buildings that can produce more revenue in the form of property and retail sales taxes per acre than those located away from city center,” said Joseph Minicozzi, president of Asheville, N.C.-based Urban3. He was speaking to a standing-room-only audience on the second night of three public workshops held in the Bike Monkey store, 121 Fifth St., on Jan. 20.

The total assessed value of property downtown is $18.3 billion, almost one-fourth of the $72.8 billion value of all Sonoma County property, the study found. The city and newly formed local smart-growth advocacy group Urban Community Partnership ( brought in Urban3 and Minnesota-based Strong Towns to analyze ways to encourage higher-density development and redevelopment in Sonoma County’s urban areas.

“We also found that 16 percent of the land (6 square miles) within the city is devoted to parking lots, with a much lower taxable base, that could become higher tax revenue sources if developed,” Minicozzi said.

At the same time, Santa Rosa represents only 2 percent of the Sonoma County footprint, while making up 32 percent of the county's tax production. Some 38 percent of County land is taxable, while 15 percent is nontaxable.

“Downtown, 36 percent of the land is taxable, but with mixed-use development and current C-10 (ten story) zoning, new and repurposed property would represent an even greater assessed tax base, and supply much-needed revenue for the city and county for ongoing and unfunded liabilities, without an increase in taxes or fees,” Minicozzi said.

Urban 3 is a private consulting firm specializing in land value economics, property and retail tax analysis and community design.

“We seek to empower our clients with the ability to promote development patterns that secure a community’s fiscal condition while reinforcing a stronger sense of place,” Minicozzi said. “As our company name acknowledges, cities and towns are a ‘cubed’ three-dimensional representation of space. This space, created by the built environment, is the basis of urban design. We strive to provide a deeper understanding of this environment by measuring data, visualizing results; and digging deeper into the effect of policies on the built environment.”

The true value of existing inner city property exceeds that of new developments just blocks away, Minicozzi said. In real estate as with development, valuation is all about location. The results of this study were revealed to city officials and staff members at a three-hour meeting earlier in the week. Dollar figures and economic data referenced in this analysis were provided by the city and county and reflect current property assessments.

“As an urban planning consultant, I always look at the opportunities associated with a property based on options and a cost-benefit analysis,” Minicozzi added. “If a more valuable urban core area is under built, based on its potential, property and sales taxes will not be adequate, leading to lower revenue for the city. Impact and permit fees don’t cover the long-term costs associated with upkeep and maintenance of streets as well as fire/police services, costs associated with fire hydrants along with other ongoing expenses.”

Those interested in encouraging economic growth should build on a foundation of understanding the tax implications of differing choices, Minicozzi said. One effective tool he uses for determining comparative economic worth is assessed value per acre. He compared valuations for several Santa Rosa-area big-box stores, shopping malls and corporate campuses:

• Wal-Mart, Rohnert Park, $803,805/acre

• Wal-Mart, Windsor, $1,393,000/acre

• Keysight Technologies, Santa Rosa, $1,448,893/acre

• Medtronic, Santa Rosa, $1,613,920/acre

• Costco Wholesale, Santa Rosa, $1,619,631/acre

• Target, Santa Rosa, $1,757,294/acre

• Coddingtown Mall, Santa Rosa, $2,237,000/acre

• Santa Rosa Plaza Mall, $4,268,000/acre

“Note: the higher the value, the closer a property is to the city center,” Minicozzi said. “Now compare the values per acre of these large retailers on dozens of acres each with the assessed value of single-lot properties in or near downtown Santa Rosa that occupy only a fraction of an acre.”

• 442 Eighth St., two stories, $4,689,640/acre

• 526 B St., three stories, $8,522,750/acre

• 553 Fifth St., three stories, $10,973,000/acre

• 520 Mendocino Ave., three stories, $12,683,300/acre

• B Street townhouses, two stories, $7,407,090/acre

• Empire Building (built in 1910, now for sale), four stories, $3,900,000/acre

• Rosenberg Building (subsidized housing), six stories, $26,316,095/acre

In the Urban3 analysis, the Railroad Square Historic District west of Highway 101, indicates that this area has the second-highest valuation following downtown Santa Rosa. In the case of the Hotel La Rose, the building was originally constructed in 1907 and later refurbished. Here are a few notable valuation examples:

• Terraces, three stories, $17,349,200/acre

• Charles Schwab, four stories, $17,683,300/acre

• Hotel LaRose, three stories, $14,000,000/acre

Another way at looking at growth potential is examining retail sales taxes paid and tax totals per acre. Minicozzi gave some local examples:

• Plaza Mall, $1.72 million total retail tax, $54,000 retail tax/acre

• Santa Rosa Marketplace, $3.05 million, $51,000

• Coddingtown Mall, $1.36 million, $22,000

• Railroad District, $234,000, $45,000

• Downtown historic core, $630,000, $52,000

“The Railroad Square results show the potential of developing property close to a passenger train right of way to provide housing and local services for those commuting by rail …,” Minicozzi said.

The third and final public workshop was Jan. 21 at Bike Monkey. It will feature Charles Marohn, president of Strong Towns, talking about the value-added implications of development close to transportation corridors.

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