That's not quite true. The profitability comes from increased density. Instead of one business with a huge parking lot generating 1,000,000/year in revenue, you

That's not quite true. The profitability comes from increased density. Instead of one business with a huge parking lot generating 1,000,000/year in revenue, you get three businesses with sidewalk traffic and street parking only generating 400,000/year each for a net gain of 200,000. Investing in the neighborhood - eg, with streetlights so that people will feel safe coming out after dark, thus effectively increasing the businesses hours of operation - might push up revenue for those three businesses to $600,000/year each, and the increased taxes will pay for the improvements. However, a more usual pattern is for the three existing businesses to be torn out and replaced with a single retail space that's up to code, beautiful, clean, modern, and a financial drain on the city.