26 ms·

Detroit has blight. LVT addresses property speculators that buy land to sit on it for 10 years and do nothing with it. With LVT they have to either pay up, deve

Detroit has blight. LVT addresses property speculators that buy land to sit on it for 10 years and do nothing with it. With LVT they have to either pay up, develop it, or sell it. All options good for the city.

PaulDavisThe1st 3y ago
> With LVT they have to either pay up, develop it, or sell it Not quite. They have to pay up while they own the land. They can develop it in ways that may generate revenue sufficient to cover the tax (e.g. a landlord-developer) They can develop it in ways that won't generate revenue, but that satisfies their own goals, and pay the tax from some other source (e.g. a homeowner) They can sell it to drop the tax liability.
- caminante 3y ago
  You just agreed with the parent. The carry cost has gone up, forcing action!
  - SoftTalker 3y ago
    If the carry cost is too high, who would buy the land? The thing missing from the above scenarios is: Owner can't afford the tax, can't find renters, can't find a buyer, so just walks away. This is why so many properties are vacant now. The owners just walked away.
    - tmnvix 3y ago
      ...the land value then drops. That drop is reflected in the cost of the LVT. A value is found that works for someone.
    - caminante 3y ago
      You're skipping a few steps. Tax lien/default sale would reset the land value. > This is why so many properties are vacant now. In Detroit...? People don't walk away because they can't afford taxes. It's because any dollar spent is negative NPV!
    - epistasis 3y ago
      Imagine a scenario where land purchase prices hover very close to $0. This is the end result of an effective LVT. It means that you only pay for the structures, or the cost to remove a blighted structure, etc. It makes real estate more liquid, and allows more people to try their hand at development without having a massive land bank worth millions of dollars. It decentralizes these decisions and lets more local players get involved. It rewards those who are productive, and encourages those who are squatting on resources to let somebody else give it a shot.
      - oneshtein 3y ago
        $0 is too high. With high enough taxes it easily can be -$1000 per acre or lower!
      - bagels 3y ago
        The land is nearly free now. You can't build things in Detroit and make a profit, construction costs outweigh sale price or possible rents.
        mactrey 3y ago
        The point is, currently if you build things then you pay higher tax. The current tax structure disincentivizes building things. We don't know what people would build without that disincentive - maybe still nothing, as you are suggesting.
        caminante 3y ago
        > The point is, currently if you build things then you pay higher tax. You're missing THE point. Your comment is too general. 1. You'll only pay higher taxes if your ratio of land/improvements is above a threshold (TBD). 2. The article says that the proposed change would lower taxes for 95+% of the population.
onlyrealcuzzo 3y ago
They should implement a blight tax or a vacant land tax instead. I don't see how this helps Detroit's problems - unless they arbitrarily set high values on land where land is possibly already worthless. The areas with the most blight have the lowest land values already. The city already owns 75k out of 380k lots (~20% of the city - most of it vacant) - and instead of trying to sell the lots - the Detroit Land Bank holds onto them to arbitrarily inflate land values. This seems like another recipe for a negative feedback loop that makes bad areas even worse. Just tax blight outright. Give away the damn land to anyone that will build something on it and live there - or get someone else to live there, pay taxes, and be a valuable part of the community - rather than a vacant lot that's a breeding ground for crime.
- kaibee 3y ago
  > They should implement a blight tax or a vacant land tax instead. A land value tax is a much more elegant solution. For one, it doesn't introduce the problem of needing to define 'vacant land'. Is a parking lot vacant land? etc
  - jrockway 3y ago
    I don't think tax law fears complexity. You make a table and there is an entry for "parcel of land with grass taller than 6 inches and containing one or more 1980s automobile with 3 or more tires" right alongside "parking lot" or "hospital".
    - chongli 3y ago
      I don't think tax law fears complexity Of course it does. Complexity in the tax law is regressive. It lets wealthier people and businesses take advantage of more deductions and writeoffs to lower their tax burden, due to the ability to hire accountants full time to work on it. Simple taxes that are difficult to avoid (such as LVT) are best if you want a progressive tax regime. One of the best features of LVT is that it taxes unearned increases in the value of land. While you can do any improvements you want to the property without increasing the LVT, improvements made by the city or other private interests to the area around your land absolutely will increase its value, thus increasing your tax burden.
ughitsaaron 3y ago
A project I worked on a while back highlighted the problem of speculation in Detroit’s land market. https://umdearborn.edu/news/mapping-detroit-new-tool-aims-identify-property-speculation-motor-city https://umdearborn.edu/news/mapping-detroit-new-tool-aims-id...
flagrant_taco 3y ago
This argument has often confused me when so many people are concerned with global warming. Why should a city incentive land owners to develop and commoditize their land? If we want to reduce human impacts on the planet, why not incentive the opposite and incentive leaving the land natural? Land value taxes prioritize GDP and profit above all else. Isn't that how we got into this mess in the first place?
- gavinsyancey 3y ago
  Generally, land is valuable (and therefore under this scheme highly taxed) because people want to live there. And if they can't live there, they'll live somewhere else, likely involving a longer commute that is worse for the environment.
  - flagrant_taco 3y ago
    Wanting to live somewhere and reducing climate impact are different though. If you build a city full of dense housing, where does all the food and water come from? Or the electricity, furniture, and clothing? Costs can be externalized, but at the environment level they still exist even if outside the city of consumers. It's also often the case that externalizing those costs adds even more impact as the product has to be shipped in and the waste shipped back out.
    - Kbelicius 3y ago
      > If you build a city full of dense housing, where does all the food and water come from? Or the electricity, furniture, and clothing? I don't understand your argument. Are you saying that people that don't live in cities don't consume, or consume less of, food, water, electricity, furniture and clothing? > It's also often the case that externalizing those costs adds even more impact as the product has to be shipped in and the waste shipped back out. They have to be shipped to fewer places and thus save resources. The only way what you are saying makes any sense is either if shipping things to more places somehow save resources or if people that don't live in cities don't need anything shipped.
xienze 3y ago
> LVT addresses property speculators that buy land to sit on it for 10 years and do nothing with it. Didn’t Detroit raze the lots in the first place, since they considered an empty lot to be better than one with a decaying house? I really doubt many of these lots will ever actually be developed to any reasonable extent, since they aren’t exactly in nice areas. And likewise I bet there won’t be many people dying to buy these lots either. My guess is the city will be taking ownership of a decent amount of land in the not-so-distant future.
- jimnotgym 3y ago
  Some of the 'nicest' areas of UK cities are redevelopments of some of the worst areas. Just because they are not nice now does not stop them being nice later.
  - xienze 3y ago
    I think you might be underestimating just how bad parts of Detroit are.
    - ninkendo 3y ago
      Yeah... "not nice" doesn't really describe it. "Ruin" is the better word for the condition of a lot of the lots. Search for "Ruins of detroit" to get an idea of what we're talking about. (Although a lot of the image results will be focused on large buildings, there are plenty that show what the smaller lots look like.)
    - jimnotgym 3y ago
      I think you are underestimating the difference being in range of German bombing has made to our respective countries attitude to urban resilience, and to the other commenter, our attitude to real ruins. Detroit has but a flesh wound.
- bluedino 3y ago
  Here's a good example of how empty those razed lots are https://maps.app.goo.gl/3XA5JtEn9xmfk3g16 https://maps.app.goo.gl/3XA5JtEn9xmfk3g16
Neil44 3y ago
I wish they would do that here. Our nearest city has tons of derelict and decaying buildings that sit on the books of faceless organisations far away staffed by people who've never set eyes on them, and don't have to live in the resulting s** hole next to them.
cpursley 3y ago
Or default in it and burden the city further. I’ve got a small plot of land (not Detroit) that I can’t seem to give away.

PaulDavisThe1st 3y ago

> With LVT they have to either pay up, develop it, or sell it Not quite. They have to pay up while they own the land. They can develop it in ways that may generate revenue sufficient to cover the tax (e.g. a landlord-developer) They can develop it in ways that won't generate revenue, but that satisfies their own goals, and pay the tax from some other source (e.g. a homeowner) They can sell it to drop the tax liability.

caminante 3y ago
You just agreed with the parent. The carry cost has gone up, forcing action!
- SoftTalker 3y ago
  If the carry cost is too high, who would buy the land? The thing missing from the above scenarios is: Owner can't afford the tax, can't find renters, can't find a buyer, so just walks away. This is why so many properties are vacant now. The owners just walked away.
  - tmnvix 3y ago
    ...the land value then drops. That drop is reflected in the cost of the LVT. A value is found that works for someone.
  - caminante 3y ago
    You're skipping a few steps. Tax lien/default sale would reset the land value. > This is why so many properties are vacant now. In Detroit...? People don't walk away because they can't afford taxes. It's because any dollar spent is negative NPV!
  - epistasis 3y ago
    Imagine a scenario where land purchase prices hover very close to $0. This is the end result of an effective LVT. It means that you only pay for the structures, or the cost to remove a blighted structure, etc. It makes real estate more liquid, and allows more people to try their hand at development without having a massive land bank worth millions of dollars. It decentralizes these decisions and lets more local players get involved. It rewards those who are productive, and encourages those who are squatting on resources to let somebody else give it a shot.
    - oneshtein 3y ago
      $0 is too high. With high enough taxes it easily can be -$1000 per acre or lower!
    - bagels 3y ago
      The land is nearly free now. You can't build things in Detroit and make a profit, construction costs outweigh sale price or possible rents.
      - mactrey 3y ago
        The point is, currently if you build things then you pay higher tax. The current tax structure disincentivizes building things. We don't know what people would build without that disincentive - maybe still nothing, as you are suggesting.
        caminante 3y ago
        > The point is, currently if you build things then you pay higher tax. You're missing THE point. Your comment is too general. 1. You'll only pay higher taxes if your ratio of land/improvements is above a threshold (TBD). 2. The article says that the proposed change would lower taxes for 95+% of the population.

onlyrealcuzzo 3y ago

They should implement a blight tax or a vacant land tax instead. I don't see how this helps Detroit's problems - unless they arbitrarily set high values on land where land is possibly already worthless. The areas with the most blight have the lowest land values already. The city already owns 75k out of 380k lots (~20% of the city - most of it vacant) - and instead of trying to sell the lots - the Detroit Land Bank holds onto them to arbitrarily inflate land values. This seems like another recipe for a negative feedback loop that makes bad areas even worse. Just tax blight outright. Give away the damn land to anyone that will build something on it and live there - or get someone else to live there, pay taxes, and be a valuable part of the community - rather than a vacant lot that's a breeding ground for crime.

kaibee 3y ago
> They should implement a blight tax or a vacant land tax instead. A land value tax is a much more elegant solution. For one, it doesn't introduce the problem of needing to define 'vacant land'. Is a parking lot vacant land? etc
- jrockway 3y ago
  I don't think tax law fears complexity. You make a table and there is an entry for "parcel of land with grass taller than 6 inches and containing one or more 1980s automobile with 3 or more tires" right alongside "parking lot" or "hospital".
  - chongli 3y ago
    I don't think tax law fears complexity Of course it does. Complexity in the tax law is regressive. It lets wealthier people and businesses take advantage of more deductions and writeoffs to lower their tax burden, due to the ability to hire accountants full time to work on it. Simple taxes that are difficult to avoid (such as LVT) are best if you want a progressive tax regime. One of the best features of LVT is that it taxes unearned increases in the value of land. While you can do any improvements you want to the property without increasing the LVT, improvements made by the city or other private interests to the area around your land absolutely will increase its value, thus increasing your tax burden.

ughitsaaron 3y ago

A project I worked on a while back highlighted the problem of speculation in Detroit’s land market. https://umdearborn.edu/news/mapping-detroit-new-tool-aims-identify-property-speculation-motor-city https://umdearborn.edu/news/mapping-detroit-new-tool-aims-id...

flagrant_taco 3y ago

This argument has often confused me when so many people are concerned with global warming. Why should a city incentive land owners to develop and commoditize their land? If we want to reduce human impacts on the planet, why not incentive the opposite and incentive leaving the land natural? Land value taxes prioritize GDP and profit above all else. Isn't that how we got into this mess in the first place?

gavinsyancey 3y ago
Generally, land is valuable (and therefore under this scheme highly taxed) because people want to live there. And if they can't live there, they'll live somewhere else, likely involving a longer commute that is worse for the environment.
- flagrant_taco 3y ago
  Wanting to live somewhere and reducing climate impact are different though. If you build a city full of dense housing, where does all the food and water come from? Or the electricity, furniture, and clothing? Costs can be externalized, but at the environment level they still exist even if outside the city of consumers. It's also often the case that externalizing those costs adds even more impact as the product has to be shipped in and the waste shipped back out.
  - Kbelicius 3y ago
    > If you build a city full of dense housing, where does all the food and water come from? Or the electricity, furniture, and clothing? I don't understand your argument. Are you saying that people that don't live in cities don't consume, or consume less of, food, water, electricity, furniture and clothing? > It's also often the case that externalizing those costs adds even more impact as the product has to be shipped in and the waste shipped back out. They have to be shipped to fewer places and thus save resources. The only way what you are saying makes any sense is either if shipping things to more places somehow save resources or if people that don't live in cities don't need anything shipped.

xienze 3y ago

> LVT addresses property speculators that buy land to sit on it for 10 years and do nothing with it. Didn’t Detroit raze the lots in the first place, since they considered an empty lot to be better than one with a decaying house? I really doubt many of these lots will ever actually be developed to any reasonable extent, since they aren’t exactly in nice areas. And likewise I bet there won’t be many people dying to buy these lots either. My guess is the city will be taking ownership of a decent amount of land in the not-so-distant future.

jimnotgym 3y ago
Some of the 'nicest' areas of UK cities are redevelopments of some of the worst areas. Just because they are not nice now does not stop them being nice later.
- xienze 3y ago
  I think you might be underestimating just how bad parts of Detroit are.
  - ninkendo 3y ago
    Yeah... "not nice" doesn't really describe it. "Ruin" is the better word for the condition of a lot of the lots. Search for "Ruins of detroit" to get an idea of what we're talking about. (Although a lot of the image results will be focused on large buildings, there are plenty that show what the smaller lots look like.)
  - jimnotgym 3y ago
    I think you are underestimating the difference being in range of German bombing has made to our respective countries attitude to urban resilience, and to the other commenter, our attitude to real ruins. Detroit has but a flesh wound.
bluedino 3y ago
Here's a good example of how empty those razed lots are https://maps.app.goo.gl/3XA5JtEn9xmfk3g16 https://maps.app.goo.gl/3XA5JtEn9xmfk3g16

Neil44 3y ago

I wish they would do that here. Our nearest city has tons of derelict and decaying buildings that sit on the books of faceless organisations far away staffed by people who've never set eyes on them, and don't have to live in the resulting s** hole next to them.

cpursley 3y ago

Or default in it and burden the city further. I’ve got a small plot of land (not Detroit) that I can’t seem to give away.