The Wealth of Communities

28 Jan 2023

I ran across an interesting article talking about how local governments (cities and counties) should look at the revenue potential of their properties. The idea here is that governments own a lot of land but often undervalue it. Instead of letting it sit idle, they could lease it out to create a stable funding stream that doesn’t involve levying additional taxes.

The obvious way to do this is to physically lease out the land, which I’m all for, but there are other approaches. For example, the article mentioned a city that put solar panels on the roofs of all of the buildings that it owns, and was eventually able to generate enough power to sell to adjacent cities. I’d be surprised if there weren’t other ways to make this work.

I think that there’s a potential hazard here that the article didn’t mention, in that some perverse incentives could arise if the government ended up owning too much land, but it also seems like that situation could be avoided with some relatively simple guardrails. On the other hand, I’d likely be in favor of the government acquiring land to be used for things like affordable housing, which could be profitable but not as profitable as luxury housing.

This is similar to the idea of Value Capture, where a government is able to sell or lease land that it owns adjacent to an improvement project (think transit station) in order to help pay for that improvement. To me, the main difference appears to be that the city or county would look at all of its assets together and have them managed by an organization whose sole focus is generating revenue, rather than the narrower focus on funding a single project.

Beyond the financial impact, I get annoyed when I see a vacant lot with a gate and a sign that says something like “County Property - No Trespassing”. I mean, I pay county taxes, why am I paying for vacant property? I don’t much care what they do with the property, honestly. They can store equipment on it, lease it out to food trucks, or just plant a bunch of native shrubs, but really anything is better than a gravel lot overrun with weeds as so much of it seems to be. I think that we’d see a lot less of this sort of thing if the government started looking at these vacant lots as assets that could provide services for the community, which would benefit us all.