Tough Talk on Taxes at Urban Land Institute Spring Meeting

Speakers at the ULI session “You Get What You Pay For”: (from left) Maureen McAvey, Edward McMahon, Thomas Murphy
Speakers at the ULI session “You Get What You Pay For”: (from left) Maureen McAvey, Edward McMahon, Thomas Murphy

The Urban Land Institute, which held its annual spring meeting in Vancouver this week, heard a provocative take on taxes and real estate development: You Get What Your Pay For. Not everybody agreed

The Thursday afternoon session was provocatively titled “You Get What You Pay For,” and provocative it was – with many in the audience lining up at the microphone after the speakers were done to question the “homage to big government” and “reckless spending” being proposed.
The presentation from three senior fellows at the Urban Land Institute delivered an unpalatable message for many of the assembled developers and real estate professionals (gathering in Vancouver, for the first time, for their annual spring meeting): that high-tax states are, in short, good for business. They are states that typically invest in education and infrastructure – and as a result, are able to build and develop a more robust economy.
“Invest” was a key word throughout the seminar. “There is a difference between spending and investment,” said one of the ULI fellows, Edward McMahon, giving the example of going out to a fancy restaurant with his wife once a month, spending $2,000 over the course of a year. “That money is gone,” he noted, versus an investment in one’s education or home, which pays dividends for years to come.
“The quality of a community’s infrastructure is the number one driver of real estate development,” said McMahon, adding: “Why would anybody invest in a community that simply wouldn’t invest in itself?”
Maureen McAvey, the second ULI fellow to speak, cited a study by the Lumina Foundation that predicted 67 per cent of new jobs created by 2020 would require some degree of post-secondary education. That, for McAvey, is why investing in a community’s education infrastructure – through higher taxes – is good for business. “The high tax states are doing pretty well – they’re educating our leaders of the future.”
According to the final ULI fellow to speak, former Pittsburgh mayor Thomas Murphy, “Every city is trying to find its place in the world – what their pitch is, what their competitive advantage is.” For Murphy, it’s a question of intentional choices for what kind of communities we want to build. He used the example of Singapore and Jamaica: two states that gained independence in 1960.
“The prime minister of Singapore made a decision: He wanted to be the most educated country in the world. Jamaica, on the other hand, made a decision to invest in resources and mineral extraction. Fifty years later, this is the result,” he said, showing a slide that compared per capita incomes then (1960: $5,100 in Singapore, $5,200 in Jamaica) and now (2011: $43,000 Singapore, $8,000 in Jamaica). “Singapore has the highest per-capita income of any country in the world. It made a decision to tax itself to invest in the future.”
Murphy finished off the session by saying that the one thing he learned from his time in office was the difficulty in making those intentional, tough calls. “Every time you want to do something, there’s going to be 100 people telling you not to do it,” he told the crowd. “If you listen to them, nothing ever happens. Or you make the choice to run over them to get things done.”
The Urban Land Institute’s 2014 Spring Meeting wraps up today at the Vancouver Convention Centre.