As a reporter whose chief preoccupation is land use, when I hear "Grow or die!" tossed out as an irrefutable fact of municipal planning, the result of which is too often is sprawl, I feel like rolling my eyes.

That's because when I hear it—and I am always hearing it—based on my years of experience, I suspect the person has accepted that urban sprawl, loss of natural beauty and/or farm land, all while wealthy land owners coexist with evermore people who can't afford a place to live, are all just a fact of life.

No. It's not. None of this is inevitable. At worst, it's just a lack of imagination, and at best, it's an unwillingness to interrogate the status quo.

With HB607 , however, our General Assembly seems poised to set a precedent for us to do both: think differently, and consider that our current property tax system is deeply flawed in that it undermines our capacity to do all the things we say we want to do, such as provide adequate housing and preserve green spaces.

Of course, the bill is wholly a Republican-sponsored bill, because Supermajority. Yet HB607 makes so much sense, it feels practical, not dogmatic, as though it could have been bipartisan.

All seven state representatives named on the bill are from Jefferson and surrounding counties. Part of a broader bill, if passed as currently written, it would authorize Louisville Metro Government to enforce a split-rate property tax in its Urban Services District, allowing land there to be taxed at a higher rate than buildings, should Louisville leaders decide there is utility in doing so.

Land more profitable when used

To understand why this is significant, it's important to grasp how and why our current system of property taxation works against us. For that, let's turn to Greg Miller, a former economist at the Department of Housing and Urban Development who became frustrated with his employer's ineffective policies, ultimately leading him to cofound the Center for Land Economics, headquartered in Washington, DC.

Since property taxes are the largest source of revenue for any local government, according to experts, Miller told me in a video call interview that this revenue stream should be tied to the community's goals and values. "At a time when we want more development, we should be taxing buildings less," he said. "And, at a time when we want less land speculation, less vacant lots, less surface parking lots, we should be taxing land more."

A land value tax policy would keep local governments revenue neutral, according to Miller, while shifting the tax burden to land speculators and allowing local governments to align market incentives with the public good, such as more affordable housing, infill, and mixed-use construction.

"Does the local government want surface parking lots, or does it want apartments in its downtown? On the exterior, does it want vacant lots, or single family homes?" Miller asked, noting that taxing buildings is harmful to communities that need more housing inventory, because the cost of property taxes on the structures is a drag, not an incentive, for developers.

In an article for New America magazine, Miller explained that, "Land value taxation works because it drives the selling price of land down while driving the holding cost up. Instead of being an appreciating asset best left idle until values rise, land becomes more profitable when put to use. The policy generates profits from providing homes, stores, or offices, not from appreciating land prices."

In other words, structures can go up or be torn down, but land is fixed in place, so taxing land changes how the land is used rather than how much of it exists. This seems to me more sensible than taxing the structures, considering that land is finite.

Communities v. speculators

Taxing the land also makes it less attractive to buy up land to let it just sit indefinitely, as we have seen in Richmond with the 1,000-plus tract of farm land along Duncannon Lane, an amalgamation of farms acquired by London, Ky.-based Begley Properties, over the course of about a decade. There has been no hint but much speculation as to what it is to become of the large tract they've amassed.

"By taxing the underlying location rather than the structure, cities shift the owners’ incentive from holding to building," Miller wrote. "And the places where land is most valuable are the places where public investment meets community demand, as in areas near schools and transit. Taxing land more fairly returns the public investment to the community that made the land valuable with their tax dollars."

To my way of thinking, this is what should excite local leaders about a land value tax policy. It is a policy designed to keep local control local by lessening the impact of land speculators, including those who live elsewhere, who can afford to buy up much of a community and therefore have an outsized impact on local property values and on what structures are built, regardless of actual community need.

Most important of all, is that this tax policy reflects a different value system than does our current property tax mechanism. Instead of putting profit from speculation before public need, this policy assumes that because the land and any resources upon it are finite yet also in the public good, wise land use policies becomes fundamental to all municipal governance decisions.

Also worth noting is that when land tax revenues are collected and then invested in the community, say by way of a transit system, or public schools, the overall desirability of the city increases. "It's a way for a city to be run like a company," Miller told me. Except in this model versus our current one, when a city invests in itself, and the value of living or working there goes up, it's the city—not the private market—that captures that increased value.

Of course, a land value tax is unwelcome by land speculators, but builders, especially those who lease out what they build, are enthusiastic, according to Miller. "There are developers we talk to all the time who just love this policy," he told me. "When you tax buildings less, then building becomes more profitable. So, for example, multi-family housing, when they are decent uses of land, will decrease in taxes."

Growing movement

That I came across Miller and the Center for Land Economics is because I have been tracking the various arms of the non-sprawl urban planning movement, which is certainly in the ascendent, as evidenced by the eight states, including Kentucky, actively engaged in creating or implementing some form of land value tax legislation. There are also two other states, Michigan and Washington, that are beginning to have public conversations about it. Notably, the interested states are a mix of Red and Blue.

Regarding HB607, the permissive language around new tax policies might only aimed at metro governance, but, said Miller, "It can open the door to a larger conversation."

I will be watching closely what happens with this bill. If it passes as written, then I will be interested to see whether and how Louisville leverages its new taxation tool. I hope it does. But even if it doesn't, now we know that there are ways to "grow or die" without sprawling, nor putting profit ahead of the people or the land itself.