Re: [LandCafe] creating a viable leasehold market
- Excellent point by Ed Dodson. Amen. Here is a case in point.
Milwaukee County, Wisconsin, contains about 17 different municipalities,
including the City of Milwaukee. In 1965, only two of those muni.s were
fully built out, with no vacant land to speak of (other than the grounds of
lakefront mansions, cemeteries, parking lots, and such of the usual
suspects). One of those two muni.s, Whitefish Bay, had more and better data
on sales of vacant land than any other, because it did something similar to
what Ed is proposing.
The City kept an inventory record of blighted homes. When one came on the
market, the City bid on it, and often got it. Then it tore down the home
and sold the land. It usually took a small loss, but made it up by getting
higher taxes from the new home, plus upgrading the surrounding neighborhood.
Plus, of course, it got lots of data on the values of bare land, used for
assessing comparable lands.
Once society recognizes the importance of valuing land correctly for
taxation, it will not be deterred by obstructionist claims that you cannot
identify it. We will do what we must do to find it.
----- Original Message -----
Sent: Thursday, September 09, 2004 6:08 AM
Subject: RE: [LandCafe] creating a viable leasehold market
> Ed Dodson with a comment....
> A technical problem associated with implementation of LVT is said by some
to be the absence of data on leasehold values for land parcels. And,
generally speaking (except for a community land trust) the amount of ground
rent received by private landowners who lease land to developers or building
owners is not publicly disclosed.
> All things being equal, as the annual tax payment begins to capture
something close to full market ground rent, there would be no imputed income
to be capitalized into a selling price. This does not mean there would be no
demand for land, only that there would be no demand for land by investors
who who purely rent-seekers. In the short to intermediate term, in fact, the
potential increase of investment in new construction and building renovation
and in business creation would prevent the disappearance of selling prices.
Thus, even though the tax on rent might be very high, it is likely that some
investors will continue to speculate in particularly centrally-located land
parcels in very high demand areas. The relief developers and businesses
receive from taxation on buildings and on earned income flows will create
greater-than-market gross rates of return that landowners may be able to
negotiate away via land prices.
> One strategy communities ought to pursue is to be to acquire land parcels
for lease to private interests and thereby create a market and market data
as a way to help set annual tax rates.
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