New Construction Subsidizes Old

I was reading city council minutes and my head was going to explode with all the coded things that some council members were saying. In one discussion, Council Member NN wanted to impose Quimby Fees on the theory that newcomers have not been paying taxes into the community and should have to buy their way into the parks and other amenities of this city. That is, they didn't pay for the park purchases so they shouldn't get enjoyment until they pay their debt to existing homeowners. 

This is so nonsensical, because, he then talked about using the Quimby Fees to buy new parks or to maintain existing parks. That sure sounds like he wants new construction to subsidize old homes, not the other way around. Hmm. Coincidentally, he wants nearly all the new housing (and Quimby Fee payers) next to the freeway in the extreme NE corner of the city while using their Quimby money to purchase parks in the coastal southern area of the city that he represents. 

BTW, the southern end of our city has been identified as a Racially Concentrated Area of Affluence. In a county that is 26% non-Hispanic white, he represents census tracts that are currently over 80% non-Hispanic white (and formerly whites-only on HOLC "red line" maps.)

Back to this idea that new construction doesn't pay their fair share for infrastructure, let's take a look at this screenshot from the California Property Tax Viewer. 

Take a look at the mixed use building with 48 homes, 8 affordable (hence, lower green property tax flags). There is also a garage and several businesses, generating more property and sales taxes since 2011.  200' by 120' = 24,000 sf. One condo unit is paying $7,200/yr in property taxes. 

Look at the single family home (SFH) behind it on a 50' by 150' = 7,500 sf lot.  It pays only $1,300 in property taxes each year or about 18% as much as one of the 48 condos. It was built in 1953 so it's been paying property taxes for 67 years.

Let's do a back of the envelope calculation and just use ratios.  One ten year old condo has already paid as much in property taxes as the older house has in 55 years.  Plus, our city charges Quimby Fees of $25,000 per net new home and a bunch of other fees totaling about $29,000.  That adds up to another 22 years of taxes from the old house. 

And that thing about sewer lines?  Complete nonsense.  Our water and sewer mains run down the street and maintenance costs go by the frontage.  That old house sits between a 6-plex on one side and a duplex on the other, each on the same 50' wide lot.  

Our sewers are run by the LA County Department of Sanitation and we're charged per hookup.  The infill townhomes are paying 2-6 times as much to maintain the sewers as the old SFH. The mixed use development has about 50 hookups on 200' so they are paying 12.5x as much for our shared infrastructure.  

The water and infrastructure myth is even more pernicious in light of water conservation (which is a good thing!) Read Adapting to Change: Utility Systems and Declining Flows. As we conserve water, the residence times in the water pipes increase, sometimes too long to be safe.  Infill housing, if it adds more people, can help keep the water residence times safe.  

If you don't add enough infill housing, you end up in San Diego's fix.  In just a few years, the cost of expensive potable water (imported from the Colorado River) they had to flush to keep their domestic water safe has increased from $200,000 to $2,000,000/year. 

Speaking of flushing, water-saving appliances and toilets mean that sewage outflow is lower volume and thicker than in the past.  That requires more energy to pump it back to the sewage treatment plant.  If managed well, infill housing can offset declining flows, save energy and reduce clogging.

Infill housing helps in two ways.  It gives you more customers to share the cost of maintaining infrastructure. And it also offsets declining flows for both inbound potable water and sewage.

That SFH is the deadbeat in the picture.  Long live infill!