Chapter 10 Land Use Controls and Property Taxes

1. Chapter 10Land Use Controls and Property Taxes

2. 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 • Political and economic perspectives of land use controls • Rationale and impact of subsidies to private developers • Federal government involvement in environmental regulation • CERCLA and the superfund

3. Role of Government in Influencing Real Estate Markets The inherent stewardship of public lands, to maintain and protect these lands for both current and future generations The provision of infrastructure and public goods that benefit all local residents and visitors The land use that affect, limit or influence private property owners or tenants

4. When Free Markets Don’t Work • Externalities • Imperfect/Incomplete Information • Construction quality hidden • Buyers unaware of structural risks • Monopolies • Utilities • “Holdouts” in land assembly efforts

5. Traditional Land Use Controls:Zoning • Features of traditional zoning • Use classifications: Residential, commercial, industrial, automotive • Use districts (zoning map) • Setback requirements • “Bulk” or density limits (minimum lot size, height limits, maximum floor area ratios) • Special use districts: Service stations, hospitals, churches, private schools, cemeteries • http://www.ci.san-marcos.tx.us/departments/planning/comprehensive_planning.htm?menu=DP6

6. Zoning in Texas • Cities have optional zoning power • Counties have no zoning authority • Exceptions  Padre Island • SB 873 (2001) • Certain counties may adopt rules governing plats and subdivisions in unincorporated areas “to promote public health, safety, morals, and welfare, and the safe, orderly, and healthful development of the area.” • May not regulate the purposes for which a building or property is used, nor the size, number, or density of buildings on a tract.

7. Zoning Issues and Concepts • Legality of zoning: Village of Euclid vs. Ambler Realty - 1926 • Exclusionary zoning (unreasonable lot size; inadequate provision for low- and moderate-income housing)

8. Zoning Issues and Concepts • Nonconforming use: Use inconsistent with and precedent to zoning map • Cannot be substantially changed • Must be continuous • Can be “amortized” away, (e.g. billboards) • Variance: Exception to requirements due to hardship

9. Traditional Land Use Controls:Subdivision Regulations • Standards for streets, sewers, and water systems • Adequate water supply for fire safety • Adequate drainage and run-off retention • Open spaces • Lot layout • Easements for utilities • Traffic and pedestrian safety

10. More New Land Use Controls • Impact fees • http://www.cityofcarrollton.com/development/bldginspection/feesched.asp • Growth restrictions • Temporary moratoriums • USSC refuses to review Petaluma, Ca. limit on the number of new housing units.

11. Building Codes • Older than zoning (circa 1900) • Issues of safety • Fire: Materials, alarms, electrical and gas systems • Sanitation: Plumbing, water, and HVAC requirements • Injury: Design and strength

12. Power of Eminent Domain • Eminent domain: Right of government to acquire private land, without the owner’s consent, for public use, with due process and just compensation • Condemnation: Legal procedure for exercising the right of eminent domain • Public use vs. public purpose • Just compensation based on highest and best use • Problems of excessive use • Inverse condemnation

13. Public Assistance to Private Business Local/ state governments can encourage or directly support private development through: • Property tax abatement for many years • Land buy downs • Industrial revenue financing – municipal bond financing • Tax increment financing (read) • Infrastructure improvements

14. Property Taxes • Primary source of local government revenue • Many taxing authorities - City - Improvement districts- County - Transportation authorities- Schools - Water management districts • Property Tax Exemptions - Religious organizations - State Property- Nonprofit organizations - Homestead- Educational institutions - Ag/Wildlife

15. Texas laws • Each county has an appraisal district • Law  Appraisals done within 3 years • Law  Maximum yearly increase on homestead = 10% • Appraisal review board • Budget needs / Sum of all appraisals  tax rate (millage), ie “$3.12 per hundred”

16. Market value $150,000 Assessed value 135,000 Less: exemptions 25,000 Taxable value $110,000 Texas Rates Computing Tax Liability Harris County, Travis County, Bexar County

17. Voluntary “Taxes” • Special Assessments • Street lights, curbs, sewer lines • Improvement district = area receiving benefit • Created by petition by property owners or legislative authority • Amount of assessment determined by • Estimated benefit to property or • Front footage • Paid in yearly installments

18. 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: assessment of the impact of any proposed federal development • Clean Air Act • Endangered Species Act

19. CERCLA, the Superfund • CERCLA: Comprehensive Environmental Response, Compensation, and Liability Act of 1980 • Identify, investigate, analyze and remediate “Brownfields” -- property contaminated with hazardous waste • Who is liable: Current/ past owners, generators/ possessors and transporters of hazardous substances • CERCLA liability is strictly retroactive, all costs and damages

20. CERCLA, Potential Liabilities and Site Assessment • Phase 1: Evidence of past or current environmental problems on the subject site? • Phase 2: Test and verify extent of the actual contamination • Phase 3: Actual action plan that usually includes remedial cleanup efforts Additional reading

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