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LOL this type of idiocy can only be brought to you by the Dems. If you ever watched one of those house flipping shows you learn not to over do it with renovation.
Quote:
City officials spent as much as $537,000 per home renovating 30 houses under a federal program to fight blight only to sell most for less than $100,000 apiece, a Detroit News investigation has found.
The Detroit Land Bank transformed eyesores — some that were rotting and burned — into gleaming gems, with glass-tiled bathrooms, stainless steel appliances, underground sprinkler systems and even $35,000 geothermal heating in a few. The goal was to entice middle-class families into East English Village and Boston Edison to strengthen the neighborhoods.
But as the land bank works to sell the last three homes in the program that began in 2011, even some buyers say the costs are outrageous for a bankrupt city. Susan Hanafee was shocked to learn from The Detroit News that $430,000 was spent on the three-story Boston Edison home she bought last year for $80,000.
“It kind of makes me sick,” she said. “It didn’t really need that much rehab. ... It makes me sad to think about the money that was poured into a particular house and ... to know my neighbors are having to scrape enough together to put a new roof on.”
but dont forget that detroit is now going to collect property taxes on those properties. maybe they did spend too much in renovations, typical government overspending. but they are selling the houses and these houses are being occupied now. in the end detroit may break even long term though.
If it can revive a neighborhood then it's worth it, but a revived Detroit is the last thing righties want - it destroys their narrative.
Detroit is undergoing a revival - and rents and property values are going up. I've been priced out of downtown Detroit - May. 27, 2014
Amid efforts to revitalize Detroit's downtown, some residents are finding they can no longer afford to live there.
One program, called Live Downtown, has attracted as many as 15,000 new residents to the downtown area, according to the mayor's office.
The newcomers bring with them money and much needed tax revenue. But they are also causing housing prices to skyrocket.
but dont forget that detroit is now going to collect property taxes on those properties. maybe they did spend too much in renovations, typical government overspending. but they are selling the houses and these houses are being occupied now. in the end detroit may break even long term though.
Math time:
Question:
At what tax rate would Detroit break even in present value terms spending $430,000 to generate an occupied home with a taxable value of $80,000? Assume an interest rate of 5%.
Answer:
Pricing the NPV of the tax revenue as if the home will generate tax-payments forever, $1 in annual payments ad infinitum at a 5% interest rate is worth $20 in net present value.
Thus, to generate $430,000 in NPV the annual tax-take would need to be $430,000 / 20 = $21,500. Thus the city would break even if it charged property taxes at a rate of $21,500 / $80,000 = 26.875%.
I don't know what property tax rates are like in the Detroit area, but where I'm from ~2% is normal, ~3% is very high, and 4%+ is unheard of.
At what tax rate would Detroit break even in present value terms spending $430,000 to generate an occupied home with a taxable value of $80,000? Assume an interest rate of 5%.
Answer:
Pricing the NPV of the tax revenue as if the home will generate tax-payments forever, $1 in annual payments ad infinitum at a 5% interest rate is worth $20 in net present value.
Thus, to generate $430,000 in NPV the annual tax-take would need to be $430,000 / 20 = $21,500. Thus the city would break even if it charged property taxes at a rate of $21,500 / $80,000 = 26.875%.
i am not looking at tax revenue in one year, more like 10 years is where the city would break even on property taxes, and that is probably where they are looking also.
i am not looking at tax revenue in one year, more like 10 years is where the city would break even on property taxes, and that is probably where they are looking also.
Changing from looking at tax revenue out to infinite years by pricing as a perpetuity to pricing based on 10 years:
Value of a 10 year annuity @ 5% real interest = ( 1 - 1.05^-10) / .05 = 7.721734929.
Annual tax take needed to recoup $430,000 spent now over 10 years = $430,000 / 7.721734929 = $55,686.97
Tax rate needed to generate this on an $80,000 house = $55,686.97 / $80,000 = 69.6%
Nothing wrong with the idea that government spending can partially or fully be offset with greater tax receipts down the line. The concept does work sometimes. Just not here, the numbers are too high on the cost side and too low on the revenue side.
Most of the money spent on 'renovation' was likely stolen by Democrat Crony contrators.
It's like the $1T Obamacare website. Where did that money go? The Dems stole it.
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