[RP TownTalk] Land Value Tax Calculator (fwd)

[bruce.wernek at mindspring.com]

I would prefer if Cafritz left the property undeveloped.  It's a nice place to take the dogs (or kids) for a walk.  I suggest folks in the reading audience take the time to do a walk about.  Just walk the trolley right of way (section which starts under the east/west highway bridge) north until you see the metro rail fence.  From there go west.

Bruce

-----Original Message-----
>From: Alan Thompson & Sarah Wayland <twacks at his.com>
>Sent: Apr 13, 2006 7:36 PM
>To: TownTalk <towntalk at riverdale-park.org>
>Subject: Re: [RP TownTalk] Land Value Tax Calculator (fwd)
>
>Roland mentioned that he thought Land Value Taxation would have its 
>strongest effect on the Cafritz property. Even that property really 
>doesn't have much of an incentive under LVT.
>
>The Cafritz property is 28.24 acres (1,230,134.4 square feet), 
>currently owned by Calvin Cafritz, sitting across Route One from 
>University Park in a prime location, and completely undeveloped. He 
>currently pays the following in taxes:
>
>STATE:       $1144
>COUNTY:      $6959
>MUNICIPAL:  $5868
>
>Under a Land Value Taxation scheme, Mr. Cafritz would pay:
>
>STATE:       $3294
>COUNTY:      $10,299
>MUNICIPAL:   $8683
>
>This means he would pay $2815 more to the town under Land Value 
>Taxation. The property is currently valued at $866,710 on the State Tax 
>Rolls.  If it were assessed at the same rate that as *my* land is 
>assessed, it would be $7.6 million.  Market value is probably more.  I 
>don't think the $2815 will motivate them much.
>
>-Sarah
>
>-------------------
>
>On Apr 13, 2006, at 9:49 AM, Alan Thompson and Sarah Wayland wrote:
>
>[Sarah here, speaking only for myself.]
>
>While I *do* support the idea of a Land Value Tax, I worry about two 
>issues.
>
>The first is that the current assessed value of the land does not 
>reflect size or location.
>
>The second is that the differential incentive is small, and I wonder 
>whether it will be effective.
>
>Let me give some examples to illustrate.
>
>(1) The value of land (versus the improvements on the land) is 
>currently set by the state, and those values do not reflect lot size or 
>location.
>
>Example 1: On my street are 3 houses: A is on one lot, B is on two 
>lots, and C is on three lots. Each address has only one house on it. 
>The land value for each property is set at:
>
>A (9000 sq ft) = $55,500
>B (18000 sq ft) = $56,400
>C (22500 sq ft) = $56,850
>
>So my neighbors all pay roughly the same tax on their land, even though 
>the smallest lot is 13,500 feet smaller than the biggest lot.
>
>Example 2: The Town of Riverdale Park sold a 649 square foot commercial 
>lot on the southeast corner of East-West Highway and Route 1 for 
>$36,000 to Riverdale One LLC (Mr. Caputo) on 6/4/2003. That same 
>property has a state-assessed value (last updated on 1/1/2004) of $200.
>
>Clearly the state will have to reassess the value of the land before a 
>"land value tax" can have any real meaning.
>
>(2) The amount of money a commercial property will pay, with the 
>current assessment structure, will not change by enough to motivate a 
>change in behavior.
>
>Example: The old Crestar Bank Building at 6200 Baltimore Avenue, 
>currently owned by Jemal Riverdale Citizens LLC, currently pays the 
>following in taxes:
>
>STATE:       $946
>COUNTY:      $8508
>MUNICIPAL:   $7173
>
>Under a Land Value Taxation scheme, Jemal Riverdale Citizens LLC would 
>pay:
>
>STATE:       $1469
>COUNTY:      $8936
>MUNICIPAL:   $7534
>
>For Riverdale Park, this means Jemal would pay $361 more to the town 
>under Land Value Taxation. He bought the building for $1,350,000. I 
>don't know that $361 will motivate any changes in behavior on his part. 
>David Hiles says that this argument (that the incentive is too small 
>(or a different version too large)) was not relevant to the merit of 
>the proposal, but I think it is worth considering nonetheless.
>
>----
>
>To summarize, the main point is that the state will have to change how 
>land is valued before Land Value Tax can truly work. A secondary point 
>is that the amount of money we are discussing here will not have much 
>impact on a developer who is used to dealing with millions of dollars 
>at a time, and doesn't seem to mind lost revenue on the order of many 
>thousands each month.
>
>-Sarah
>
>
>
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