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Old 02-07-2014, 05:21 PM
nei nei won $500 in our forum's Most Engaging Poster Contest - Thirteenth Edition (Jan-Feb 2015). 

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Location: Long Island / NYC
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Quote:
Originally Posted by North Beach Person View Post
An 1/8 of an acre is about 5000 sq. ft., 50X100. Using 8 foot setbacks on the side you now have a maximum house width of 34 ft., less if there's a side porch. The front setback will vary from 15 ft. to 25 ft., the rear setback will be similar, tending to the higher number. Under the new stormwater regulations impervious surfaces will be limited so any patio or driveway will have to be stone or pervious concrete. Most jurisdictions now also have green space requirements detailing minimum number of trees to be planted (or retained).
Not in Lowell, or any old town/city location in New England where the front setback can often be much less.
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Old 02-07-2014, 05:27 PM
 
Location: North Beach, MD on the Chesapeake
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Quote:
Originally Posted by nei View Post
Not in Lowell, or any old town/city location in New England where the front setback can often be much less.
You'll see that in the colonial towns, especially near the main street core. Move out a bit and you'll find the setbacks.
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Old 02-07-2014, 05:35 PM
nei nei won $500 in our forum's Most Engaging Poster Contest - Thirteenth Edition (Jan-Feb 2015). 

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Location: Long Island / NYC
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Quote:
Originally Posted by North Beach Person View Post
You'll see that in the colonial towns, especially near the main street core. Move out a bit and you'll find the setbacks.
Sometimes, yes sometimes no. I live in New England. Lowell:

https://maps.google.com/maps?q=Lowel...65.78,,0,-3.93

https://maps.google.com/maps?q=North...,298.1,,0,6.52

https://maps.google.com/maps?q=water...35.49,,0,-1.09
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Old 02-07-2014, 05:45 PM
 
Location: Vallejo
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Originally Posted by North Beach Person View Post
You don't develop anything without there being a demand for it. Owners don't usually sit on empty property for the fun of it, they sit on it because there's no demand for "highest, best use".

This plan is one which, if implemented will result in the total devastation of any green space, setbacks or bulk limits, totally destroying any sense of perspective in smaller towns (which are the locales George aims at). We've had elected officials here propose this a few times. They've all lost the next election.

The idea, which isn't feasible, is that owners will build-anything- to avoid high tax rates. Just as a note, this idea is one contributor to sprawl-tax farmland at developed rates to encourage the farmers to sell out to developers.

Don't you get tired trotting out discredited ideas with no grounding in reality?
They're usually not empty. Parking lots are big money.Take the parking lot that just sold last year in downtown Seattle for $16.5 million.

$30/day to park, about 50 parking spots = $390,000 per year in weekday daily parking. You'll probably pick up another 30 cars for nights/weekends @$10/day which is another $182,000 a year. No employees and the things grossing $500,000 a year. I mean, you're not going to turn down $50 million/acre if it comes a knocking on your door, but for something that doesn't cost you much of anything to operate, $500,000 a year is pretty nice money.

Also makes suburban living mighty appealing. I can buy a a nice wooded acre in Des Moines, about 15 miles out, for $100-200k.
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Old 02-07-2014, 06:04 PM
 
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Quote:
Originally Posted by drive carephilly View Post
The OP really should've done a better job at introducing the concept - perhaps with an FAQ or something - because it's pretty clear most people are unfamiliar with the concept in a practical or theoretical sense.



As I pointed out in my previous post there are obvious flaws in implementation but it's always revenue neutral. If my property taxes went up by $2000 a year but I stopped paying $1000 a year in sales tax and $1000 a year in income tax then it's a wash.

Wage taxes and sales taxes are already highly regressive. The income tax in most states that have one is not very progressive either. In theory wealthy people would choose to locate their houses on larger lots, near parks and open space on the periphery or near the center of town. That land would be taxed at a higher rate. Again, the theory goes that the closer you are to public amenities and more robust infrastructure they higher your tax rate. Again, this only works alongside strict land use controls.

The lower and middle classes already have trouble staying amongst the ranks of property owners and it has nothing to do with a land value tax. In most of the larger metros the cost of housing is the largest impediment. Eroding wages and high property taxes don't help.

The idea behind the LVT was that the wealthy can always hide their assets in tax shelters or just send it offshore altogether. They don't derive their wealth through a salary so those kinds of taxes are ineffective.
On the other hand you can't hide a factory or an office building and you certainly can't hide the land that it's on.

The theory, and I mostly agree, is that we shouldn't tax productivity because it encourages people to be less productive or to try to hide it. I shouldn't be punished (in the form of higher taxes) for fixing up my house - and indeed I recently had my house pointed and had a bit of work done to fix some of the brownstone and my property taxes went up 25%. That makes no sense. On the other hand I shouldn't be able to let my house fall apart then write it off on my federal taxes. That makes no sense either.
Ok, this is the best explanation of how and why.
Others seem sidetracked on whether 1/8 acre is big or small and arguing setbacks. WTF?

So for the FAQ:
#1 - Would this only apply to urban core where development of vacant land should be encouraged?
#2 - If it applied on the suburban edge, won't it encourage sprawl?
#3 - Is it a planning tool to encourage urban development or a tax reform tool?
#4 - How can it encourage commercial/MF development without hurting middle class home ownership?
#5 - In an urban area a vacant lot is a negative, in a rural area it is a positive. How does that work?
#6 - Why assume a house on an acre is taxed 8x a house on a 1/8 acre? Not the case now.
#7 - Why do people respond to an idea, by just stating, "that's a dumb idea", without saying why?
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Old 02-07-2014, 06:06 PM
 
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Quote:
Originally Posted by nei View Post
Home ownership has some benefits, I'm not sure if a land tax would make it harder to own a home, just more land. Why would owning just land have much to do with a free and upwardly mobile society? Under a land tax system, a home on one acre would be taxed eight times more than a home on an 1/8 acre.


This part is interesting . . . and where it gets confusing. So here is a sort of hypothetical -

My family lives (mostly) in a small-ish NJ borough and the surrounding townships. My grandparents always lived in the borough. They could walk to the bakery, the barber, the pharmacy, hardware store, for basic grocery items, etc but they have to drive to a supermarket, movie theater, department store, etc. They're also within walking distance of a train station with hourly off-peak service to NYC. I'm mixing up my tenses here because when my grandfather died my grandmother moved into a new-ish townhouse down the street.

So my uncle has a big house on 1 acre about 4 miles out from the center of town. Let's just say he pays about $10k per year in property taxes. My grandparents old house was on ~1/8 of an acre and would probably be about $7k per year in taxes. My grandmother's townhouse was probably on .05 acres and we'll say the taxes are $6k. Everyone is paying taxes on the improvements to their property. My uncle's house was at least twice the size of my grandparents house and maybe 3x the size of the townhouse. But my grandparent's land was a lot more valuable per sq. ft. than my uncle's is.

Under LVT, cetarus paribus, my uncle would stop paying income taxes but his property taxes would probably go up to ~$15k. My grandparent's house would drop to $5k and the townhouse to $3k or something like that. It gets tricky because my grandparent's land is more valuable and they have better access to everything so, in theory, that should be take into account.

My rowhouse is on a lot that measures ~16x60 so that's 960 s/f or .02 acres so if my house was around the corner from my grandparents I would be paying significantly less in property taxes than they would with an LVT. Under the current regime I'd probably be paying quite a bit more (if my house was in their town) because my house is three floors and ~2000 s/f whereas their house is ~1400 s/f.

But where my house actually is it's a quick walk to the subway (<12 minute service), half a dozen bus routes with good headways, a library, supermarket, playgrounds, etc, etc. So, really, my taxes should be quite a bit higher than my grandparents with LVT and perhaps close to what my uncle's would be. Of course, I wouldn't be able to afford that because I'm not that baller. So, in theory, if I wanted to stay in the same general vicinity I would move to a smaller lot, further from the subway or if I wanted to stay in a house of similar size I would move further from the center - maybe out to Mt. Airy or way out in West Philly or even across the river.

Those scenarios happen often anyway. It's not like no one has ever heard of "drive 'til you qualify" or, if you're in the city, "do you really need that 3rd bedroom?" They're just driven by house values rather than a land tax.
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Old 02-07-2014, 06:08 PM
 
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Originally Posted by drive carephilly View Post
People land bank all the time. I held on to a vacant lot in Philly for 4 years. Eventually I built a house on it but in the interim 4 years my property taxes ranged from $60-$90. That's ludicrous. There are plenty of developers and parking companies sitting on relatively large tracts of land that they pay maybe $2-$3000 per year in taxes on. They're speculating, plain and simple. No one in the business hesitates to call a parking lot of strip mall on the edge of the downtown core "an interim use." Not even the owners themselves.





First of all it's not a matter of parking or no parking. It's a question of surface parking vs. structured parking but still if you're in a big city where any of this stuff becomes relevant, well . . .

Telephones have been around for +100 years. The internet is pretty well developed at this point. You can get just about anything delivered to your door including kegs of beer. Amazon and a host of other companies are now experimenting with delivery drones.
Minnesota brewing company successfully delivers drinks with drones - The Daily Athenaeum Online: Opinion

Even if you were so impulsive that you decided, "I have to paint my apartment right now!" and ran out to the store for 5 cans of paint there are these things called taxis. You step to the curb, stick your hand in the air, they stop, you get in. They'll take you wherever you want to go.

Maybe in yuppie land you can step to the curve and get a taxi. Where I live you will have to call the taxi first wait 20-30mins for it to arrive, pay for the trip, pay while he waits for you in line at home depot, and pay on the way back that is going to get mighty expensive over time.

List of U.S. cities with most households without a car - Wikipedia, the free encyclopedia

If I read this list right less than 30% of the households in town lack a car. Any business that has a lot has the potential to be attractive to 70% of the households and do you know how expensive structured parking can be to build? Much cheaper to have a lot unless the lot is really making money.

Public transit is great for going to work, school maybe for some fun things but I would hate to depend on the bus.
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Old 02-07-2014, 06:16 PM
 
Location: Thunder Bay, ON
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Parking may bring in a fair bit of revenue in some places, but in these places, a higher density building would bring in even more revenue. Downtown Calgary has very high parking rates (only Manhattan is more expensive), so this is a place where it would bring in tons of parking revenue. Monthly parking rates are about $460 downtown. Lets say there's 350sf of land per parking space. For $1400 a month, you can get maybe a 800sf apartment in Downtown Calgary, to which you can add maybe 200sf for hallways/elevators/stairs. That means that with an FSI of 0.94 or more, residential will yield more revenue than parking. That's not very dense for Downtown Calgary.

Here in Waterloo Region, downtown parking goes for around $135/month. An 800sf apartment might rent for $1100 a month if not more. That means a property with a residential FSI of 0.35 or more would generate more revenue than surface parking, so even a typical single family home of the sort you'd have in Waterloo Region's city cores would generate more revenue than surface parking. This means that under a land value tax, there is nothing here that would make sense to tear down for surface parking, except maybe a small run down shack on a large lot (which doesn't exist here anyways). If the building is already there, that's different from if it isn't though. If you have a vacant lot, it might be more profitable to turn it to parking than put up some buildings since the buildings will cost a lot more to construct, although I'd have to go through the math... In any case though, switching to land value tax would stack the odds more in favour of buildings than the current property tax system.

Lets see though, a 4 storey building, wood frame, with 2.5 FSI on a 1/4 acre lot would be 27,500 sf built. The rental rates assume some parking is available, lets say 20 spots*400sf each so 8,000sf located on a single underground floor. Cost to build would be maybe 27,500sf*$120/sf + 8,000sf*$90/sf for a total of $4,020,000. The residential might rent out at $30,000 a month. Total value of the property might be $4.02M+$0.35M for the land = $4.37M.

Parking lot on 1/4 acre would be generating $4,050 a month and be worth maybe $0.35M for the land and $0.02M for the parking lot improvement for a total of $0.37M.

Currently, they're probably taxed at around 1% per year, so the apartment building would pay $3642 per month and the parking lot $308 per month. If you make them equal (land value tax), say something in between at $1,975 per month. Also lets assume annual interest rates of 4%.

Assuming the return on investment includes the cost of buying the land.

ROI

Parking lot (LVT): 439 months
Parking lot (current): 147 months

Apartment building (LVT): 325 months
Apartment building (current): 371 months

Monthly revenue on investment has been returned

Parking lot (LVT): $2,075
Parking lot (current): $3,742

Apartment building (LVT): $28,025
Apartment building (current): $26,358

The apartment building makes more sense either way as a long term investment because once you've paid off your loan, you'll be bringing in a lot more revenue. However, the time it will take to raise enough revenue to pay off the loan is much longer than for the parking lot under the current tax system. Under the LVT system, if you can get that $4M loan, it is worth building the apartment building because the ROI is shorter AND once you've paid off the loan you'll be getting a lot more revenue.

By the way, I haven't included maintenance costs. Under the current tax system, larger paying parking lots can still make a profit if they hire some kid to man the ticket booth. Under the land value scenario, even the largest parking lots will have their profits squeezed to almost nothing (small parking lots would be losing money). The effect of including maintenance will be relatively small for the apartment building.
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Old 02-07-2014, 06:18 PM
 
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Originally Posted by Malloric View Post
They're usually not empty. Parking lots are big money.Take the parking lot that just sold last year in downtown Seattle for $16.5 million.
$16.5million purchase price $500k/yr = 33 years just to recoup your initial investment. When you factor in the real estate transfer tax and any broker's fees that's at least 35 years.

Parking lots are big money when you buy low and sell high - in other words, when you speculate that the development going around you will raise the value of your land. Parking lots in the city are worthless when there's nothing to walk to.

That would not be a very smart business move if the parking company wasn't speculating, didn't have development plans or wasn't planning to build a parking garage on that lot in the hopes of quintupling their revenue stream.
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Old 02-07-2014, 06:25 PM
 
Location: Pittsburgh, PA (Morningside)
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Originally Posted by North Beach Person View Post
An 1/8 of an acre is about 5000 sq. ft., 50X100. Using 8 foot setbacks on the side you now have a maximum house width of 34 ft., less if there's a side porch. The front setback will vary from 15 ft. to 25 ft., the rear setback will be similar, tending to the higher number. Under the new stormwater regulations impervious surfaces will be limited so any patio or driveway will have to be stone or pervious concrete. Most jurisdictions now also have green space requirements detailing minimum number of trees to be planted (or retained).
A 34 foot house seems impossibly wide to me. My own is 12 feet wide, and I hope to one day upgrade to a 16 or 24 footer.
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