Reimagining Cities-Disrupting the Urban Doom Loop

MORE RESIDENTIAL = MORE REVPSF RESILIENCE Revenue per square foot index (2019 vs 2023, % change)

0%

10%

20% 30% 40% 50% 60% 70% 80%

10%

0%

-10%

-20%

-30%

-40%

-50%

Live % Inventory (2023)

% Change in Revenue per Square Foot

Downtown Downtown Adjacent

Urban Commercial

Urban University

Downtown Downtown Adjacent

Urban Commercial

Urban University

Source: Places Platform, LLC; Cushman & Wakefield Research Note: Three cities also have an income tax (New York, Philadelphia and Washington DC). Total % change, not an annualized growth rate.

The most revealing insight into WalkUP performance regarding the city budget would be a net fiscal impact analysis. This analysis calculates the net fiscal impact of a specific area, such as a WalkUP, by subtracting the costs of city services from tax revenues. This can then be compared to the fiscal impact of a single-family neighborhood. The biggest challenge of performing a net fiscal impact is that not only is every city different in their tax revenues, as mentioned above, they are equally different in their cost of city services (public safety, parks, water and sewer, streets, public schools, etc.). Adding to the complexity is that the cost of many city services are generally fixed, allocating to specific districts using a unique formula for each service category. However, some service categories are variable costs. And just to make it more complex, some city services are a combination of both (known as a stair-step cost structure). This level of analysis is far beyond the scope of this research, so we have focused only on the revenue fiscal analysis. Other research confirms the fiscal overperformance of denser places with a mix of product types. One study by Smart Growth America on fiscal impacts reported that compact development recovered 90% of its marginal fiscal costs, whereas traditional sprawl and leapfrog development recovered only 43%. 74 Other research indicates that smart growth development would save about 38% on infrastructure costs like roads and sewers when serving compact development, such as WalkUPs, instead of large-lot for-sale housing subdivisions. 75 The primary reason WalkUPs are more fiscally efficient when it comes to the cost of city services has to do with density of development—a key attribute of smart growth development. High-density residential development, such as 40 units per acre, is much cheaper (per square foot) than lower-density options, such as one unit per acre, across all infrastructure categories. The cost of roads, sidewalks, water mains, sewers, policing and fire

74 Nelson, A., J.C. Nicholas and J.C. Jeurgenmeyer (2022). ”Rationale for Smart Growth Fiscal Impact Analysis and Model Fiscal Impact Assessment Ordinance.” Washington: Smart Growth America. 75 Smart Growth America, Building Better Budgets, May 2013.

52 Cushman & Wakefield