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Re: [LandCafe] creating a viable leasehold market

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  • Mason Gaffney
    Excellent point by Ed Dodson. Amen. Here is a case in point. Milwaukee County, Wisconsin, contains about 17 different municipalities, including the City of
    Message 1 of 2 , Sep 9, 2004
      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.

      Mason Gaffney

      ----- Original Message -----
      From: <ejdodson@...>
      To: <LandCafe@yahoogroups.com>
      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.
      >
      > [Non-text portions of this message have been removed]
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      > Please think twice before posting to the group as a whole
      > (It might be that your note is best sent to one person?)
      > To post message to group: LandCafe@yahoogroups.com
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      > Consult Value Capture Initiative at: http://ecoplan.org
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