Tuesday, January 29, 2008

More Kinds of Taxes

Ohio law allows for the formation an entity called a Community Development Authority, which can levy property taxes to help pay for the burden a community bears as a result of new homebuilding. Such a tax applies only to new developments, and therefore has some of the same characteristics as Impact Fees. New Albany has used a 5 mill levy by its Community Development Authority to help pay for a new high school, a fire station and roads.

Some are suggesting that a Community Development Authority be established in the Big Darby Accord zone, and that a 10 mill levy be collected on new development. It is proposed that this money be used to buy open space and to build roads and sewers. Of course the developers say it will hurt their business.

Buying open space can be a good thing. The more acreage that is taken out of development, the better for the whole community. I haven't done the math, but I suspect that it may be true that it's cheaper to buy up 1,000 acres of open land than it is to scale up the school system to handle 4,000 more kids. You pay for the land only once, but you have to pay for the school staff necessary for those kids forever. For 4,000 kids, we would need at least 200 teachers which cost the district perhaps $75,000/yr each. That's $1.5 million/yr.

If land sells for $25,000/acre, then 1,000 acres would cost $25 million. That's a 16 year break-even. If you take into account the escalating salary and benefit costs, it's probably closer to 10 years.

Makes sense to me.

1 comment:

  1. You mentioned apathy as a problem in an earlier post, but I think envy and ignorance plays a part too:

    "I've cited this a half-dozen times but this was years ago - Americans were polled: would you rather see economic growth in the U.S. at 4% and Japan at 5% or the both at 2%, and Americans said both at 2%. They'd cut off their nose to spite their face as long as somebody else isn't doing better than them. They wanted their economy to grow half as fast, as long as the Japanese weren't moving even faster than we were." -WLW radio talk show host Mike McConnell