Does Land Development Pay for Itself? A Critique of Cost-of-Community-Service Studies
18 Pages Posted: 26 Oct 2018
Date Written: October 25, 2018
Our paper addresses the fundamental belief of community planners that multifamily housing development does not pay for itself. This belief is based on flawed cost-of-community-service studies, produced and used mainly by urban planners. These studies fail to understand market responses to land use decisions, they violate basic assumptions necessary to compare projects using benefit-cost analysis, they fail to understand the distinction between private and public goods in allocating costs, and they rely on average instead of marginal costs to allocate costs of additional service levels. Multifamily housing projects will offer better returns when correct methods are employed to determine their relative merits. More importantly, better studies will help address the growing housing imbalance that is rewarding current homeowners at the expense of renters and new home buyers.
Keywords: cost of community service, fiscal impact analysis, fiscalization of land use
JEL Classification: H76, H72, R52, R58
Suggested Citation: Suggested Citation