Transcript Chapter 10 Land Use Controls and Property Taxes

Chapter 10
Land Use Controls and
Property Taxes
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Major Topics
 Origin, purpose and types of local land use
controls
 Uses and process of determining property
taxation
 Impact of property taxes on property values
 American Disabilities Act
 Political and economic perspectives of land
use controls
 Rationale and impact of subsidies to private
developers
 Newer environmental regulations
 Federal government involvement in
environmental regulation
 CERCLA and the superfund
 Environmental impact statement
 Sustainable development and Green Design
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Introduction
Role of Government in Influencing
Real Estate Markets
1. The inherent stewardship of public lands,
to maintain and protect these lands for
both current and future generations
2. The provision of infrastructure and public
goods that benefit all local residents and
visitors
3. The land use that affect, limit or influence
private property owners or tenants
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Balancing Land Use Controls
vs. Market Freedom
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Authority and Purposes of
Regulating Real Estate Use
 Three primary rationales for government
interference in real estate markets:
1. Markets are imperfect and market
participants may be ignorant of facts that
significantly affect their welfare
2. Every land use has the potential to
generate externalities that may positively
or negatively influence adjacent property
values
3. Real Estate values may be enhanced with
good land use planning
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Zoning
 Zoning is the regulation of permitted land
uses, as well as minimum or maximum
structures, upon geographically define
contiguous districts.
 Zoning limits potential land uses and often
use a cumulative type hierarchy system
 By grouping similar land uses together
through zoning codes, there is less
negative impact on other types of land
uses that may be less noxious
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Building Codes
 Building codes are a series of standards
and specifications designed to establish
minimum safeguards in the erection and
construction of buildings, and to protect
those who live and work in them
 Building codes describe in great detail the
materials, methods, and techniques to be
used in the construction of buildings
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Building Codes: Historic Structure
Rehabilitation and Preservation
 In 1987, tax credits became available to
encourage rehabilitation and preservation
of historic real estate structures
 A tax credit is more valuable than a
deduction from income for the calculation
of taxable income, since tax credits are
dollar for dollar tax savings
 A two tiered system is still in place today
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Building Codes: Design Review and
Aesthetic Controls
 “Highway Beautification Act” under
President Johnson
 Consistent environmental quality - EQD
Building Codes: Design Review and
Aesthetic Controls
 ADA requires that facilities that are
generally open to the public be accessible
to all members of society
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Impact of Property Taxes on
Property Value
 Property Taxes exert a negative influence
on property values because they increase
the cost of ownership
 Fiscal Redistribution: the mismatch of
service receipt and cost support – city vs.
suburbs
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Public Assistance to Private Development
 Local/ state governments can encourage or
directly support private development
through:
1. Property tax abatement for many years
2. Land buy downs
3. Industrial revenue financing
4. Tax increment financing (TIF)
5. Infrastructure improvements
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
State/ Local Level Subsidies
 Use of abating local and state income
taxes on the earnings of a new local
employer in order to encourage a location
move to an area in a given state and/ or
county or city
 Competition for large employers has been
so strong in some urban areas, especially in
areas that border two states, that
governments end up in a bidding war of
economic incentive packages
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Environmental Land Use Regulation
 Environmental activism officially began at
the Federal level in 1969 with the passage
of the National Environmental Policy Act
 Environmental Impact Statement: the first
assessment of the impact of any proposed
development
 Clean Air Act
 Federal Water Pollution Control Act
 Endangered Species Act
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
CERCLA the Superfund
 CERCLA: Comprehensive Environmental
Response, Compensation, and Liability Act
of 1980
 Also referred to as the “Superfund”, it sets
forth a complex regulatory scheme to
identify, investigate, analyze and remediate
property contaminated with hazardous
waste
 Who is liable: Current/ past owners,
generators/ possessors and transporters of
hazardous substances
 CERCLA liability is strictly retroactive
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
CERCLA, Potential Liabilities
and Site Assessment:
Managing Real Estate Risks
 Phase 1: To determine whether there is
evidence of past or current environmental
problems on the subject site
 Phase 2: To test and verify the extent of
the actual contamination
 Phase 3: Actual action plan that usually
includes remedial cleanup efforts
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
Preserving Wetlands
 For many years, wetlands were thought to be
useless mosquito infested swamps
 Today we are learning that they are wondrous
sources of life and diversity, with species that
are crucial for a healthy environment
 Wetlands help control floods, which are
important ecological processes
Sustainable Development and Green Design
 Green design involves a more environmentally
oriented approach to building design,
construction and maintenance
 Sustainable development plans include a more
holistic approach to the environmental impact
of the entire development
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner
END
“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner