The $74K Question: How Grand Rapids Zoned Away Its Tax Base

Executive Summary

Grand Rapids is currently facing a “Math Problem.” To meet our 2029 housing goals, we need 13,323¹ new units, yet our current zoning laws incentivize “moats” of empty asphalt over homes and taxpayers.

This analysis of a single neighborhood commercial corridor reveals a staggering disparity in how we are using our limited land:

• The Efficiency Gap: The traditional, walkable business district generates 414% more property tax revenue per acre than large retail.

• The Density Dividend: The dense apartments are 63% more tax-productive than the single-family neighborhood while housing 3.4x more people in the same land.

• The “Black Hole” Effect: Tax-exempt properties and underutilized lots in this single corridor represent $1.2M in foregone annual tax revenue and 660 “missing” housing units.

We are essentially playing a real-life game of Sim City, but we’re choosing the “Economic Self-Harm” expansion pack. To fix our housing shortage and stabilize our infrastructure budget, Grand Rapids must stop zoning away its tax base and start incentivizing the high-value, walkable typologies that built this city in the first place.

The Value Per Acre Framework

Grand Rapids is 45.6 square miles or about 29,203 acres. 550 of these are water, so we have 28,659 acres of land.

If you asked a car dealer about a Ford F-150’s fuel efficiency vs. a Prius and were told the F-150 has a 36-gallon tank while the Prius only has a 10.5-gallon tank, you’d be confused; you wanted miles per gallon, not tank size. An F-150 gets 16-24 MPG while a Prius gets 52-57 MPG. The Prius is clearly more efficient, even though its tank is only a third of the F-150’s. Tank size doesn’t measure efficiency; MPG does. Similarly, when evaluating how productive a piece of land is for a municipality, acreage doesn’t tell you much. The best metric is taxable value per acre (VPA)—simply the property taxes paid divided by the number of acres. This normalizes the data to show how much revenue you generate per acre of land.

Two years ago, I conducted a city-wide analysis of each lot in the city and computed the Citywide average VPA of $25k. This masks dramatic variation ($8.5k to $535k by neighborhood), hiding which land uses subsidize others! To better understand the context about what types of land uses are most productive, I decided to take a relatively random snapshot of a place in the city that contained varied land uses and break down the actual taxes collected by land use typology.

I grew up playing the original Sim City, where the player was given a sandbox city to zone and develop. There wasn’t a win condition; you just used zoning and infrastructure projects to try to increase the population and their standard of living. The more I learn about zoning in the real world, the more I’m appalled that we do things that actively perpetuate economic self-harm.

Let’s examine the evidence.

Case Study: A neighborhood commercial corridor

Insight 1 - Small parcels that support numerous small businesses have a much higher VPA than large retail parcels where the building itself becomes an island surrounded by a moat of parking lot.

The pink area is what the GR Zoning Ordinance calls a “Traditional Business Area (TBA)”. These are walkable, pedestrian-friendly establishments with buildings that are usually built directly at the sidewalk. Here, this is represented by the Schnitz Deli, Grand Rapids Bicycle Company, and Common Ground Coffee House. These 9 businesses consume 0.67 acres and generate $74.5k in taxes per acre.

Contrast that with Family Fare, which consumes 5.2x as much space, most of it dedicated to a parking lot that is rarely filled. Its VPA is just $18k. The more productive pink area requires 20% of the space but is 414% more productive.

Gas stations and auto-service garages are also poor land uses from a VPA perspective. Veenstra’s Garage generates $19k per acre—slightly better than Family Fare, but it’s built on a corner, which makes a large swath right across from the highly productive land incompatible with walkable development. It promotes car culture and wastes an opportunity to build a vibrant, walkable business center.

We should be encouraging more efficient land uses and fewer of the relatively unproductive ones.

Insight 2 - Dense developments are more productive than single-family homes while also resulting in a lower tax burden per unit of housing; that means both the city and the residents living there benefit. It’s a win-win situation-what economists would describe as a positive-sum game.

The properties in orange are representative of most of GR’s traditional neighborhoods: single-family homes on about a 1/5 of an acre. These 20 units consume 1.89 acres with a VPA of $44.8k. That’s a density of 10.6 units/acre.

Contrast this with Fulton Square Apartments: 47 Units on 1.3 acres. That’s a VPA of $73k and 36 units/acre. So 3.4x as many units per acre AND 1.6x as productive as single-family houses. This is a win-win: the city generates more revenue per acre while residents pay less tax per housing unit.

Additionally, dense development requires far less linear infrastructure per capita. Each additional home in a traditional suburban pattern means each house has to bear a higher infastructures costs to maintain and replace roads, water lines, and sewer systems. Denser housing typologies reduce the city’s per-capita infrastructure maintenance burden, which means less taxes!

I’m not saying we should replace all our single-family housing stock, but if we need 13,323 additional units of housing, using the traditional neighborhood typology of 10.6 units/acre, we’d need 1,257 acres or 4.4% of all available land in the city. Utilizing the denser housing style of 36 units/acre, we’d need only 370 acres or 1.3%. That’s a much more manageable way to add the needed housing, in my opinion.

The Tax-Exempt Land Challenge

Insight 3 - Tax-exempt properties create massive opportunity costs, consuming prime acreage while contributing nothing to infrastructure maintenance. In this corridor alone, these three parcels represent $920k in foregone annual tax revenue.

Non-profit entities like churches, charter schools, thrift stores, and city-owned properties are exempt from paying property taxes. Let me be clear: I recognize that non-profits provide essential community services. Churches offer spiritual community, schools educate our children, and the Salvation Army provides support to vulnerable populations. The community garden provides a neighborhood gathering space. These are all valuable contributions that don’t appear on a tax ledger. However, when these organizations occupy land inefficiently, there’s a real cost to the community in foregone tax revenue and housing opportunities.

The blue area shows that the Salvation Army consumes 3.3 acres while paying $0 in property tax revenue, so they contribute nothing toward the city roads, water, and sewer infrastructure they use. Remarkably, they’ve converted 3-4 lots across the street into overflow parking despite their entire building being surrounded by a largely empty parking lot.

The black area shows a Charter School consuming 4.7 acres (34% more than the inefficient Family Fare) while also paying $0 in taxes.

The final area is the 4.6-acre Hillcrest Community Garden. This is probably the most contentious example. The garden provides a neighborhood gathering space and environmental benefits like stormwater management and heat island reduction. However, 4.6 acres utilizing the Fulton Square Apartments typology could provide 167 units of housing and generate $335.8k in tax revenue annually—revenue that could fund parks, improve schools, or repair infrastructure citywide.

Combined, these three tax-exempt properties occupy 12.6 acres that could house 454 residents and generate $920k annually. I’ll leave it to the reader to decide which option better serves the broader community.

The Elephant in Medical Mile

While no healthcare facilities appear in this corridor, Medical Mile and Downtown are filled with large tax-exempt healthcare institutions. Though technically “non-profit,” these organizations operate more like businesses than traditional community non-profits and often demonstrate little concern for efficient land use. Establishing guardrails to prevent poorly designed healthcare developments should be a priority in our ongoing zoning ordinance rewrite; we cannot afford to let institutions that pay no property taxes consume prime urban land with sprawling, auto-oriented campuses.

Grand Rapids Land Use Efficiency Analysis

Land Use Type	Acres	Annual Property Tax	Value Per Acre	Opportunity Cost (Units at 36/acre)	Annual Taxes at Baseline Density
Trad. Biz District	0.67	$50k	$74.5k	24 units foregone	$49k (–$1k)
Fulton Sq. Apartments	1.30	$90.5k	$73k	(baseline)	—
Single Fam. Homes	1.89	$84.5k	$44.8k	44 units foregone	$138k (+$53k)
Veenstra’s Auto Garage	0.33	$6.3k	$19k	12 units foregone	$24k (+$18k)
Family Fare	3.5	$62k	$18k	126 units foregone	$255k (+$193k)
Charter School	4.7	$0	$0	169 units foregone	$343k (+$343k)
Comm. Garden	4.6	$0	$0	166 units foregone	$336k (+$336k)
Salvation Army	3.3	$0	$0	119 units foregone	$241k (+$241k)

Key Findings:

• This traditional business district generates 414% more tax revenue per acre than the grocery store
• Dense apartments generate 63% more tax revenue per acre than single-family homes while housing 3.4x more residents
• Non-profit land uses consume 12.6 acres (equivalent to 454 potential housing units) while contributing $0 in property taxes
• Total opportunity cost of inefficient land uses: 660 potential housing units and $1.2M in incremental annual tax revenue just in this single neighborhood commercial corridor analysis

Policy Implications

Grand Rapids needs bold action to address its housing shortage and maximize tax-productive land use. Here are six policy recommendations, ordered by impact and feasibility:

1. Eliminate parking minimums and establish parking maximums citywide. Parking lots generate minimal tax revenue, reduce walkability, create stormwater runoff, and waste land we desperately need for housing. Start with eliminating minimums for developments near transit corridors and traditional business districts. This is already happening in cities like Minneapolis, Buffalo, and Raleigh—Grand Rapids should follow suit.

2. Raise height limits in walkable commercial corridors and near transit. To meet our need for 13,323 housing units while preserving neighborhood character, we must allow density in appropriate locations. Increasing height limits from 3-4 stories to 6-8 stories near business districts would create the residential density that walkable businesses need to thrive while making efficient use of our limited land. When people can live in denser, well-connected communities, they can walk, bike, or use transit to meet more of their daily needs—reducing their dependence on cars or even making car-free living possible.

3. Require or encourage mixed-use development for large-footprint commercial projects. If a grocery store or big-box retailer will occupy premium land, require housing or office space above it. This converts tax-inefficient land into tax-productive land while adding needed housing units. Bonus, the commercial business will have built in customers. A city filled with just residential housing units isn’t a vibrant city, it’s a bedroom community often on the edges of vibrant cities. But I believe this chicken-and-egg problem probably gets solved by encouraging dense housing first; a small convenience or grocery store makes sense if there’s enough people nearby.

4. Partner with tax-exempt institutions on land-use efficiency, or tweak zoning to prohibit inefficient uses. Rather than viewing nonprofits as the enemy, develop incentives for them to use land productively. Options include: allowing them to lease unused portions to for-profit businesses (coffee shop + school; daycare + church), creating revenue-sharing arrangements where a portion of land becomes taxable, or providing grants to nonprofits that voluntarily consolidate onto smaller, more efficient footprints. When an organization doesn’t have to pay property taxes, they have little incentive to use land productively.

5. Implement spacing requirements for auto-oriented uses. Limit gas stations, drive-throughs, and auto service garages to no more than one per mile in commercial corridors. This prevents clustering of low-VPA uses on high-value corner lots and preserves opportunities for walkable development. Too many corners get competiting gas stations directly across from each other. Cannabis facilities are required to be at least 1000 feet away from public or private K-12 schools, so maybe we model the ordinance after that? (Note: This will face significant business community opposition and should only be pursued after winning easier battles first.)

Conclusion: Playing the Real-World Sim City

Remember the original Sim City? The game taught us that every zoning decision has cascading consequences. Zone too much industrial and your citizens get sick. Build only low-density residential and your city sprawls unsustainably. The same principles apply in the real world, except the stakes are much higher.

Grand Rapids needs 13,323 new housing units by 2029. Our current zoning creates a fundamental math problem: we’re allocating our most valuable resource—land—to uses that generate minimal tax revenue while consuming the space we desperately need for housing. This single neighborhood commercial corridor analysis demonstrates that we have better options simply by replicating typologies that already exist!

The data is clear: walkable business districts, dense housing, and efficient land use aren’t just aesthetically pleasing—they’re economically essential for a thriving city. Every acre we dedicate to underutilized parking lots or inefficiently configured buildings is an acre we can’t use to house our growing population or generate the tax revenue needed to maintain our infrastructure.

What You Can Do:

• Attend city planning commission meetings and voice support for denser, more walkable development
• Contact your City Commissioner about revising parking minimums and height restrictions
• Share this analysis with neighbors and community members
• Provide feedback to me if you disagree with this analysis, or I overlooked an insight

We can’t undo decades of auto-oriented development overnight, but we can make better choices going forward. Let’s start treating our limited land like the valuable, finite resource it is.

Methodology

I looked up each address via the Kent County GIS tool, which had the 2025 Taxable Value. I ignored the Principle Residence Exemption by calculating the property tax using the current millage rate of 51.1249/$1000 of taxable value. I used the actuals so that it would represent what was actually happening. An argument could be made that I should have used the SEV thanks to Michigan’s 1994 Proposal A, which limits the growth of a property’s taxable value to the rate of inflation or 5%, whichever is less.

Limitations of this analysis:

• Does not include sales tax revenue - While Family Fare generates lower property tax per acre, it likely produces substantial sales tax revenue, however, this is captured at the state level instead of the city. This analysis focuses solely on property tax productivity and land use efficiency.
• Does not quantify employment density differences - Traditional business districts likely employ more people per acre than larger stores, creating additional economic multiplier effects not captured here.
• Cost-side analysis absent - This analysis measures revenue but not costs. Different land uses may have varying infrastructure maintenance costs, public safety demands, and utility load patterns. The analysis assumes infrastructure costs are roughly uniform per acre.
• Selection bias potential - I chose this corridor because it contained diverse land use types that would illustrate different development patterns. While I’m confident the generalized insights hold citywide, the specific numbers and percentages shouldn’t be treated as representative. A comprehensive city-wide analysis would require substantially more time and resources.
• Temporal snapshot - Property tax data from 2024; assessed values fluctuate over time and this captures one moment in the city’s development.
• Taxable value vs. SEV complexity - By using actual taxable value instead of State Equalized Value (SEV), the timing of ownership changes affects the analysis due to Proposal A’s inflation cap. To validate my insights, I recalculated using SEV: the orange block VPA increased to $78.3k, the purple parcel to $92k, and Family Fare to $54k. While this narrows some gaps, the core finding remains—dense, walkable development is significantly more tax-productive per acre than auto-oriented development.
• Environmental and social benefits not quantified - The community garden provides stormwater management, urban heat island reduction, and neighborhood cohesion benefits that don’t appear on a tax ledger. Similarly, schools and nonprofits provide community value beyond their tax contribution.
• No consideration of where economic activity occurs - A grocery store’s employees and customers may spend money elsewhere in Grand Rapids, generating economic benefits not captured in a single-site VPA calculation.