5 ms·

I think the article starts with the assumption that all other things are equal, ie comparing a $350K home in the city to a $350K home in the suburbs. Both homes

I think the article starts with the assumption that all other things are equal, ie comparing a $350K home in the city to a $350K home in the suburbs. Both homes will pay the same in property tax, but the home in the suburb requires vastly more infrastructure (roads, water, sewer, gas, electricity, telecommunications, etc) to support it for the simple reason that it suburbs are more spread out. Those costs are hidden from the homeowner, the city must absorb them. In the scenario where the home in the suburb is much less expensive than the one in the city, this problem is only exasperated because now the suburban house pays even less in property tax.

rootusrootus 10y ago
I guess I don't fully understand the problem here. Acknowledging that this likely varies by location; the 'city' I live in (Oregon City, OR) is a small town and completely tax-separate from the big city I work in (Portland). Not even in the same county. The folks in Portland aren't subsidizing my suburban lifestyle, and Oregon City is filled mostly with other homeowners just like me. So aren't we paying our own taxes towards our water, sewer, gas, electricity, and so on? My property taxes are lower than Portland at the same time that my infrastructure should cost more based on the analysis given in this article. But instead, I'd pay more in all regards to live downtown.
- hyperpape 10y ago
  If you work there, then there's an infrastructure cost to your travel, office, etc. There are also some tax revenues when you do stuff in town. But you're by no means separate.
  - ant6n 10y ago
    Exactly. That's how suburban bedroom communities in effect suck away tax money from the big cities they rely on.
    - madengr 10y ago
      Not exactly. I pay 1% earnings tax to Kansas City, MO even though I live in a KS suburb.
      - hyperpape 10y ago
        I don't think that arrangement is the norm, though I believe it existed in Pittsburgh where I used to live. In any case, even where those taxes exist, you still have to look at the range of services consumed vs taxes paid. You might be underpaying or overpaying.
- matt4077 10y ago
  I think it's almost tautologically true that higher density requires (for example) less road, and less road is cheaper than more road. So that would just mean the differences you pointed out must be external to this analysis. As a first stab in the dark I'd ask: does Oregon City have any poor people, or old people? If it's a rather new community build as a satellite for Portland's professional class, the demographics may be completely different from that of the state as a whole. Portland may also suffer from its past: maybe they have pension obligations that they didn't build capital for. Or, conversely, Oregon City may be underfunding its future obligations. I also just looked u the numbers to see what the difference is and you are right: Portland Pop: 604,000 Budget: 4,000,000,000 = $6600/person/year Oregon C.Pop: 34,000 Budget: 165,000,000 = $4860/person/year
- trome 10y ago
  The City of Portland is footing the bill for most of the roads you drive on, while missing out on essentially the only revenue they could receive from you, whether it be funding Tri-Met or paying for the other costs of running the city. Most of your waking hours are spent under their protection for police, fire & EMS, yet at most they are getting nominal taxes from your employer. Wilsonville, OR pulls a similar scheme wherby they have a large taxable commercial base, but since they have very few residents they need to provide little school or medical funding, thus making the tax burden on businesses there minimal. City Of Industry, CA does the same thing but to an even larger degree, and Intel Oregon liked to use this exact strategy to minimize their tax burden. When it comes to utilities, the cost to serve a house in Oregon City with Gas, Electricity, Internet, etc both for maintenance and installation is significantly higher. Where I could pull fiber to a 50 unit MDU in tens of hours and get a 40% uptake rate, suburbs and exurbs (which Oregon City is a mix of) would take me a few hundred hours to connect 50 homes, just due to the sheer quantity of extra wiring needed. Then you get into the uptake rate, and you are looking somewhere like 20% to 25% with a massively higher maintenance burden (somewhere on the order of 2x to 3x). This is why 3rd party ISPs and WISPs focus on apartments and condos, and why Centurylink covered Portland with fiber, but won't cover suburbs like Kent, WA with fiber. The ROI is bad, and doesn't make sense.
- thescriptkiddie 10y ago
  You're right, the folks in Portland aren't subsidizing you, you're paying your own taxes. The difficulty is that in the long term, those taxes might not bring in enough revenue. As long as the suburb keeps growing there is no problem, because state/federal grants, special taxes levied on new development, and ever-increasing property values keep the money flowing in. But eventually growth will slow, property values will stagnate, and aging infrastructure will become more expensive to maintain. Oregon City will have to raise taxes dramatically just to maintain the status quo, and this could have the perverse effect of driving people away and reducing tax revenue further. This is exactly what is currently happening in Detroit. http://www.strongtowns.org/the-growth-ponzi-scheme/ http://www.strongtowns.org/the-growth-ponzi-scheme/

rootusrootus 10y ago

I guess I don't fully understand the problem here. Acknowledging that this likely varies by location; the 'city' I live in (Oregon City, OR) is a small town and completely tax-separate from the big city I work in (Portland). Not even in the same county. The folks in Portland aren't subsidizing my suburban lifestyle, and Oregon City is filled mostly with other homeowners just like me. So aren't we paying our own taxes towards our water, sewer, gas, electricity, and so on? My property taxes are lower than Portland at the same time that my infrastructure should cost more based on the analysis given in this article. But instead, I'd pay more in all regards to live downtown.

hyperpape 10y ago
If you work there, then there's an infrastructure cost to your travel, office, etc. There are also some tax revenues when you do stuff in town. But you're by no means separate.
- ant6n 10y ago
  Exactly. That's how suburban bedroom communities in effect suck away tax money from the big cities they rely on.
  - madengr 10y ago
    Not exactly. I pay 1% earnings tax to Kansas City, MO even though I live in a KS suburb.
    - hyperpape 10y ago
      I don't think that arrangement is the norm, though I believe it existed in Pittsburgh where I used to live. In any case, even where those taxes exist, you still have to look at the range of services consumed vs taxes paid. You might be underpaying or overpaying.
matt4077 10y ago
I think it's almost tautologically true that higher density requires (for example) less road, and less road is cheaper than more road. So that would just mean the differences you pointed out must be external to this analysis. As a first stab in the dark I'd ask: does Oregon City have any poor people, or old people? If it's a rather new community build as a satellite for Portland's professional class, the demographics may be completely different from that of the state as a whole. Portland may also suffer from its past: maybe they have pension obligations that they didn't build capital for. Or, conversely, Oregon City may be underfunding its future obligations. I also just looked u the numbers to see what the difference is and you are right: Portland Pop: 604,000 Budget: 4,000,000,000 = $6600/person/year Oregon C.Pop: 34,000 Budget: 165,000,000 = $4860/person/year
trome 10y ago
The City of Portland is footing the bill for most of the roads you drive on, while missing out on essentially the only revenue they could receive from you, whether it be funding Tri-Met or paying for the other costs of running the city. Most of your waking hours are spent under their protection for police, fire & EMS, yet at most they are getting nominal taxes from your employer. Wilsonville, OR pulls a similar scheme wherby they have a large taxable commercial base, but since they have very few residents they need to provide little school or medical funding, thus making the tax burden on businesses there minimal. City Of Industry, CA does the same thing but to an even larger degree, and Intel Oregon liked to use this exact strategy to minimize their tax burden. When it comes to utilities, the cost to serve a house in Oregon City with Gas, Electricity, Internet, etc both for maintenance and installation is significantly higher. Where I could pull fiber to a 50 unit MDU in tens of hours and get a 40% uptake rate, suburbs and exurbs (which Oregon City is a mix of) would take me a few hundred hours to connect 50 homes, just due to the sheer quantity of extra wiring needed. Then you get into the uptake rate, and you are looking somewhere like 20% to 25% with a massively higher maintenance burden (somewhere on the order of 2x to 3x). This is why 3rd party ISPs and WISPs focus on apartments and condos, and why Centurylink covered Portland with fiber, but won't cover suburbs like Kent, WA with fiber. The ROI is bad, and doesn't make sense.
thescriptkiddie 10y ago
You're right, the folks in Portland aren't subsidizing you, you're paying your own taxes. The difficulty is that in the long term, those taxes might not bring in enough revenue. As long as the suburb keeps growing there is no problem, because state/federal grants, special taxes levied on new development, and ever-increasing property values keep the money flowing in. But eventually growth will slow, property values will stagnate, and aging infrastructure will become more expensive to maintain. Oregon City will have to raise taxes dramatically just to maintain the status quo, and this could have the perverse effect of driving people away and reducing tax revenue further. This is exactly what is currently happening in Detroit. http://www.strongtowns.org/the-growth-ponzi-scheme/ http://www.strongtowns.org/the-growth-ponzi-scheme/