A stone’s throw away from Foshay Tower, an undeveloped parking lot covers an entire block of downtown Minneapolis real estate.
Why does this prime spot host cars instead of a sparkling skyscraper? The owner explained his reasoning four years ago to Minnpost:
“There isn’t any, I believe, surface parking lot owner in the city of Minneapolis that would rather have a surface parking lot as opposed to having the next IDS Center built on his or her piece of real estate … If there is somebody who thought they could make money on an office building, there would be an office building under construction at this moment.”
In theory, at least, there are many development options that could benefit both Minneapolis and the parking lot’s owner:
- A new apartment building or condo development would increase city housing stock
- Additional office space would bring more workers downtown, benefiting existing area businesses
- New commercial businesses would gain from the spot’s central location and access to transit
There are, of course, many other development possibilities that would make both the landowner and the city happy. So why does the lot sit mostly undeveloped?
A discouraging commercial property tax
According to the author of the Streets.MN article, the Hennepin County and Minneapolis property tax code discourages construction from taking place. For the owners of similar lots, “Just the threat alone of an increased tax burden can make it unprofitable to construct new and useful developments.”
We have more about the argument for a land value tax in an upcoming post. Please check back.