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> An older Arizona law might offer a template for other states looking to balance private property rights with local public interests. Rather than chipping away

by elihu 7y ago

> An older Arizona law might offer a template for other states looking to balance private property rights with local public interests. Rather than chipping away at specific local restrictions, the state passed the Property Ownership Fairness Act in 2006, reframing the question of regulation in terms of eminent domain. If a local regulation diminishes the value of land by imposing new limitations on the use of the property— such as increasing the minimum lot size or changing the zoning to lower-value uses—the jurisdiction must compensate the property owner for his loss. Arizona’s approach helps achieve a middle ground, where neither the city government’s mandate nor the landowner’s property right is absolute. I'm not so sure that's a good idea. On one hand, I like the general principle of fairness at work and that a person shouldn't have to absorb the loss of the value of a major asset simply because of an arbitrary rule change. On the other hand, I don't think governments should have to pay costs associated with fixing bad rules or addressing an injustice. Also, if government has to pay for rule changes that reduce the value of a property, should they also receive payments from property owners when a rule change increases the value of a property?

seanmcdirmid 7y ago
> Also, if government has to pay for rule changes that reduce the value of a property, should they also receive payments from property owners when a rule change increases the value of a property? Don't they already through increased property taxes? In fact, if some rule reduces the value of their property, perhaps the best compensation would be a property tax reduction or even rebate?
- munk-a 7y ago
  By that same logic don't they already pay for property value reduction via a reduction in property taxes? I think the long term shift of revenue from property taxes alone have been observed to be insufficient to properly influence the market behavior - that makes a fair bit of sense since mayoral terms are almost never twice the mandatory reassessment window and sometimes don't even exceed the standard length between reassessments.
- jbay808 7y ago
  It probably depends on the jurisdiction, but many places (such as Vancouver) adjust tax rates to meet the budget requirements. So if property values double across the board, tax rates will halve, such that you're paying the same number of dollars as last year. If only your property value doubles, then yes, you'll pay more in property tax than you did last year, and your neighbours less. But anyway, the city certainly doesn't get the value increase back in taxes, and you could presumably sell your property and capture the increase before paying more than a fraction back in tax.
  - seanmcdirmid 7y ago
    Kind of true, but the city will make a grab for that value eventually. Property taxes in Seattle, for example, have been scaling with increase in property prices. California will re-adjust property tax valuations on sale of property (encouraging people not to sell...). Why not pay $500/month in property taxes on that $800k townhome? And really, why would that be unexpected? As the value of the house rises, the services that can be provided increase, often on direct demand of those house owners themselves (they want good/better schools, for example).
    - munk-a 7y ago
      I think this is just that terrible America effect, governments are constantly under attack for inefficient spending so they constantly fight to increase revenue sources even when that increase isn't immediately necessary just so they'll have some margin to safely jettison when they come under attack for not spending all the money they're collecting. It's extremely weird, but seems to be accurate, that the US is the only place on earth where people become less trusted via the action of taking on public service responsibility.
      - seanmcdirmid 7y ago
        It really isn't that though, governments never have enough money to provide for all the things that their residents are asking for. It isn't really like "oh, let's grab some more taxes now just in case we need it later", its more like "how do we upgrade from a B-level city to an A-level one?" or worse: "how do we fight off a downgrade from a B-level city to a C-level one?" The American tax burden isn't really that bad compared to everywhere else in the developed world, especially for the facilities that we demand (huge houses, less density, lots of roads, nice schools with football stadiums, etc...).
specialist 7y ago
"...I don't think governments should have to pay costs associated with fixing bad rules or addressing an injustice." AZ's POFA 2006 (and equiv in other states) sounds like Investor-State Dispute Settlement provision in NAFTA. https://en.wikipedia.org/wiki/Investor-state_dispute_settlement#NAFTA_Chapter_11 https://en.wikipedia.org/wiki/Investor-state_dispute_settlem... Fortunately, it appears most of those cases, like when Methanex sued the USA for $970m when California banned MTBE, were dismissed on the basis that democratic governments should be able to decide things.
closeparen 7y ago
>should they also receive payments from property owners when a rule change increases the value of a property? Yes, this is called "value capture." Bargaining with developers to extract concessions like affordable units (BMR), community spaces (POPOs), neighborhood maintenance (CBDs), and donations to anti-development activist groups is the bread and butter of development politics. Since developers are universally and vigorously despised, this is a great source of funding. If a project still pencils out, the community gets some extra services without having to raise taxes. And if the project doesn't pencil out anymore, the community is usually happy about that too.

by elihu 7y ago

seanmcdirmid 7y ago

> Also, if government has to pay for rule changes that reduce the value of a property, should they also receive payments from property owners when a rule change increases the value of a property? Don't they already through increased property taxes? In fact, if some rule reduces the value of their property, perhaps the best compensation would be a property tax reduction or even rebate?

munk-a 7y ago
By that same logic don't they already pay for property value reduction via a reduction in property taxes? I think the long term shift of revenue from property taxes alone have been observed to be insufficient to properly influence the market behavior - that makes a fair bit of sense since mayoral terms are almost never twice the mandatory reassessment window and sometimes don't even exceed the standard length between reassessments.
jbay808 7y ago
It probably depends on the jurisdiction, but many places (such as Vancouver) adjust tax rates to meet the budget requirements. So if property values double across the board, tax rates will halve, such that you're paying the same number of dollars as last year. If only your property value doubles, then yes, you'll pay more in property tax than you did last year, and your neighbours less. But anyway, the city certainly doesn't get the value increase back in taxes, and you could presumably sell your property and capture the increase before paying more than a fraction back in tax.
- seanmcdirmid 7y ago
  Kind of true, but the city will make a grab for that value eventually. Property taxes in Seattle, for example, have been scaling with increase in property prices. California will re-adjust property tax valuations on sale of property (encouraging people not to sell...). Why not pay $500/month in property taxes on that $800k townhome? And really, why would that be unexpected? As the value of the house rises, the services that can be provided increase, often on direct demand of those house owners themselves (they want good/better schools, for example).
  - munk-a 7y ago
    I think this is just that terrible America effect, governments are constantly under attack for inefficient spending so they constantly fight to increase revenue sources even when that increase isn't immediately necessary just so they'll have some margin to safely jettison when they come under attack for not spending all the money they're collecting. It's extremely weird, but seems to be accurate, that the US is the only place on earth where people become less trusted via the action of taking on public service responsibility.
    - seanmcdirmid 7y ago
      It really isn't that though, governments never have enough money to provide for all the things that their residents are asking for. It isn't really like "oh, let's grab some more taxes now just in case we need it later", its more like "how do we upgrade from a B-level city to an A-level one?" or worse: "how do we fight off a downgrade from a B-level city to a C-level one?" The American tax burden isn't really that bad compared to everywhere else in the developed world, especially for the facilities that we demand (huge houses, less density, lots of roads, nice schools with football stadiums, etc...).

specialist 7y ago

"...I don't think governments should have to pay costs associated with fixing bad rules or addressing an injustice." AZ's POFA 2006 (and equiv in other states) sounds like Investor-State Dispute Settlement provision in NAFTA. https://en.wikipedia.org/wiki/Investor-state_dispute_settlement#NAFTA_Chapter_11 https://en.wikipedia.org/wiki/Investor-state_dispute_settlem... Fortunately, it appears most of those cases, like when Methanex sued the USA for $970m when California banned MTBE, were dismissed on the basis that democratic governments should be able to decide things.

closeparen 7y ago

>should they also receive payments from property owners when a rule change increases the value of a property? Yes, this is called "value capture." Bargaining with developers to extract concessions like affordable units (BMR), community spaces (POPOs), neighborhood maintenance (CBDs), and donations to anti-development activist groups is the bread and butter of development politics. Since developers are universally and vigorously despised, this is a great source of funding. If a project still pencils out, the community gets some extra services without having to raise taxes. And if the project doesn't pencil out anymore, the community is usually happy about that too.