We measure car value based on miles per gallon, not miles per tank. Why don't we do the same for our cities' developments?

When you shop for a car, what qualities do you look for? If you’re trying to make the best financial decision, do you pick your car based on its miles per tank or miles per gallon?

At Urban3, we use many different metaphors to help people across the country uncover their city’s economic potential. Urban3’s data-driven approach has found a disturbing pattern that may sound familiar: we're not as rich as we like to believe we are. Our problem is not a lack of growth, it’s a lack of productive development that grows wealth over time.

The solution is to prioritize development that is measurably productive. This is a complicated and multifaceted issue, so the way we frame it matters. That's where the miles per tank vs. "miles per gallon analogy comes in.

Here are five cars, ranked by the size of their gas tank. Each has its own benefits and drawbacks depending on your preferences. Different people want different things from their car, but everyone tends to make the decisions that give them the most value for their dollar. In the post-war era until the 1970s, our economy was booming and gasoline was plentiful and cheap. As a matter of efficiency, it would have been rational to buy the F-150 because it would allow you to drive longer distances without stopping to fill up.

But what seemed rational then now seems laughable, since we’ve realized gasoline is a finite resource with an ever-increasing cost. Car manufacturers now see the need to design vehicles that prioritize fuel efficiency per gallon of expensive gas.

Here are the same cars, but ranked in a way that makes much more sense. If we're trying to maximize the amount we can drive on each gallon of gas, we’d buy the Isetta at 50-70 miles per gallon; it’s a matter of simple division.

So, how does this relate to cities? The lifeblood of a local government’s budget is property taxes. Just like our car assessments before the ‘70s, we have inherited an outdated metric for measuring the productivity of development. We tend to focus on the total value of real estate and the total tax production while ignoring land consumption and space.

This is tantamount to buying a car based on its range, or assuming that land is an infinite resource. Developable land, like petroleum, is not infinite. It is limited by municipal boundaries, and more importantly, by the cost to make it developable.  

This map above displays the total taxable value of developments in Buncombe County, NC. From this illustration, it seems like Biltmore Estate is generating an outsized contribution to the county’s tax base. But this approach completely misses the impact of land consumption and the comparative tax production efficiency. Just as measuring “miles per tank” is an accurate but not particularly useful metric, tax value per property reveals little about the true value of development.

In this second map, we take a “miles per gallon” approach and normalize value by the space it consumes. The warmer shades represent greater tax value per hectare, and the grey areas are nontaxable. The resulting map shows which properties are generating the maximum amount of value for the space and resources they consume, and which are not. By analyzing this pattern, we can see how mixed-use, traditional development close to the city center produces the most value for the county.

We should talk about productivity in our buildings the same way we talk about productivity in our cars. Gasoline is non-renewable, and if anything, land is even more scarce. If we're try to get the most bang for our buck with a $4 commodity, shouldn’t we be even more concerned about this metric for a $40,000 commodity?

Let’s reframe the way we look at land. We don’t have to reinvent the wheel, we just have to use the development pattern that has proven itself to grow value over time.

---

---