[ElevenLathe]

Yeah, it seems like it might pencil out if the housing is very cheap to replace (and therefore insure) but the tax revenue you can gain from it is high. Since local taxes are mostly property taxes, this is basically a paradox: if the property is cheap, the taxes will be too.

That said, there are some cities that have a local income tax so, in theory, one can imagine a scenario where, as a development project, some local government convinces high-income artisans or work-from-home workers to move into extremely cheap housing by subsidizing their disaster (flood, fire, earthquake, etc.) insurance. This is again likely a paradox: if high-income people wanted to live there, the housing wouldn't be cheap anymore.