Real Estate Ch.4

Special assessments

Special assessments are taxes specifically levied for a certain purpose that benefits a limited area.

4.1 What constitutional power enables state and local governments to regulate land use?

State and local governments are granted police power by the constitution to regulate land use.

4.14 "Given the following data, compute taxable value: Market value: 100,000. Assessment percentage: 85 percent. Exemption: 10,000. (1) With a tax rate of 25 mills, what is the amount of the property tax? (2) What is the effective property tax rate?"

The amount of property tax equals $1,875. The effective tax rate is 1.875%

4.8 Explain what launched the "revolution in land use controls" since about 1970.

"An environmental revolution in the late 1960s launched the revolution in land use controls about 1970. Environmental events such as publication of Silent Spring, the Love Canal incident, and the concept of spaceship earth all contributed to the land use control revolution."

4.12 Explain the difference between condemnation and inverse condemnation.

"Condemnation is the legal procedure of the government taking private property through eminent domain. Inverse condemnation is an action, initiated by property owners against the government, to recover the loss in their property's value, arguing that restrictions imposed on the property constitute a "taking.""

Economic and environmental impact statement

"Economic and environmental impact statements analyze a development project's effect on the surrounding areas.

Nonconforming use

"Nonconforming land use is one that has previously been allowed on a parcel of land but which would no longer be permitted due to a change in the zoning ordinance

4.9 Identify two divergent views in recent planning theory concerning the best practice in street layouts and in the relationship between residential and commercial land use.

"Traditional planning of street layout is built through a hierarchy of cul-de-sacs. Additionally, traditional planning favors complete containment of nonresidential land uses in designated areas. On the other hand, the new urbanism planning allows for grid pattern, narrow streets, and a mix of land uses within the same area."

4.10 Identify four differences between a PUD and traditional zoning

A PUD can differ from traditional zoning by allowing mixed uses, not imposing uniform setbacks, allowing variable density, and incorporating open spaces and nature preservation along with structures. pud is mixed up like

Variance

A variance is an exception to the requirements of an existing zoning ordinance due to a hardship condition.

Elements of traditional zoning include all except: A. Performance standards B. setback requirements C. bulk limits D. land use categories E. provision for special use districts

A. Performance standards

The authority for approving site plans for local projects ultimately rests with the: A. The elected governing commission or council B. mayor or city manager C. planning board or commission D. planning board or commission staff E. board of adjustment

A. The elected governing commission or council

Ad valorem

Ad valorem taxes are based upon the value of the property.

affordable housing allocation

Affordable housing allocation is a requirement that encourages or mandates a "reasonable and fair" component of new housing construction for lower-income families.

A comprehensive plan usually deals with which of the following elements? A. Land uses B. Population C. Public services D. Natural resources E. All of the above

All of the above A. Land uses B. Population C. Public services D. Natural resources

"In an area with growing population, community lakes have become polluted from defective septic tanks that were page 98installed in an earlier time when there were fewer dwellings and lower land use density. Should the owners of the septic tanks be required to convert to community sanitary sewers, though it would cost several thousand dollars? Who should pay for the conversion, if not the owner? "

Although the law currently states that a property owner is responsible for any hazardous material on the site, there are many reasons for arguing that the contaminator should be responsible for the cleanup. Under the current law, innocent parties are hurt by the actions of others, which seems inequitable. For example, a property owner may not even be aware of how a nearby property owner is contaminating the land. However, from a broader public policy perspective, it is easier to hold the current property owner accountable for the condition of a property. Furthermore, such a requirement encourages potential purchasers of property to undertake the necessary due diligence prior to committing to a real estate purchase. Most importantly, as the owner, you might be responsible for the cleanup on the property despite not causing the contamination. Second, the potential resale value is reduced because the site is contaminated. Further, the site may be tarnished in the future, even if the hazardous materials were cleaned up.

urban service area

An urban service area delineates a boundary around a community where local government plans are set to provide for public services while urban development is discouraged outside the urban service area.

A new form of land use control that replaces zoning by land uses with separation of building/development types is: A. Form-based zoning B. PUD C. Performance requirements D. impact fees E. urban planning

B. PUD

Zoning is an exercise of which type of general limitation on property rights? A. Eminent Domain B. Taxation C. Police Power D. Escheat E. All of the above

C. Police Power

concurrency

Concurrency is the requirement that infrastructure be available in an area before development takes place.

"A local businessman has applied for a permit to construct a bar that will feature "adult dancing" in a commercially zoned area in view of the entrance to your residential subdivision. As an owner of a $350,000 house within the subdivision, would you favor or oppose this development? What effect do you think it could have on the value of your property? If you were opposed, how could you fight approval of the permit?"

Constructing an adult establishment near a residential area creates a negative externality to the surrounding neighborhood. The development will adversely affect home values in the residential subdivision. Opponents to the approval of the permit should argue that zoning laws should exist to protect the value and stability of single-family subdivisions, and homes unprotected by zoning risk a loss in property value if the business locates nearby. Various restrictions exist within the commercial zoning classification, and the adult bar should only be permitted in specific zoned areas that are located away from residential areas.

4.16 List three criticisms of the property tax

Criticisms of property taxes include that they can be regressive, the rates can be uneven by geographical area and property type, and it frequently has been poorly administered.

4.11 Explain what change has occurred since 1950 in the use of eminent domain.

Since 1950, the use of eminent domain has come to include public benefit as a public use. Therefore, the public does not need to use the property, but only to benefit from its taking.

The most accurate conclusion about the regressivity of the property tax is that it is: A. Regressive B. Not regressive C. Based on ability to pay D. Regressive, but when benefits are considered, the net result may be fair. E. Not regressive until the benefits are considered

D. Regressive, but when benefits are considered, the net result may be fair.

"New urbanism" is a term used to describe: A. Growth management laws enacted by state governments B. Improvement of transportation systems to encourage dispersion of a city's population C. The requirement that infrastructure be available concurrently with new development D. The theory that residential and commercial uses should be integrated, streets and parking should discourage through traffic, and neighborhoods should be pedestrian oriented. E. The trend for the construction of self sufficient "new towns"

D. The theory that residential and commercial uses should be integrated, streets and parking should discourage through traffic, and neighborhoods should be pedestrian oriented.

Traditional land use controls (pre-1970) include: A. Zoning B. Building codes C. subdivision regulations D. a and b, but not c E. All three a, b, and c

D. a and b, but not c A. Zoning B. Building codes

Externalities in land use include all except: A. Leap frog development B. increased storm runoff from paving C. traffic congestion D. inability to judge the quality of a structure, once built E. noise created by a land use

D. inability to judge the quality of a structure, once built

Property taxes are a major source of revenue for: A. The federal government B. school districts C. local governments D. state governments E. both local governments and school districts

E. both local governments and school districts

4.3 List three examples of negative externalities in local land use.

Examples of negative externalities that affect local land use are excessive smoke, congestion, debris, noise, and excessive storm runoff.

Exclusionary zoning

Exclusionary zoning tends to exclude housing for lower-income groups.

Exemption

Exemptions are a specified deduction from a property's assessed value before calculating property tax bills."

extraterritorial jurisdiction

Extraterritorial jurisdiction allows local governments to plan and control urban development outside their boundaries until annexation can occur."

4.4 List three aspects of land use typically restricted by zoning, in addition to the type of land use.

In addition to the type of land use, zoning typically imposes setback requirements, building height limits, minimum lot dimensions, and building floor area limits as a ratio to land area.

"A medium-size city has proposed to build a "greenway" along a creek that flows through the center of the city. The city wants to clear a strip about 50 feet wide and construct a paved path for bicycles and foot traffic (walkers and joggers). Proponents claim that it would be a highly desirable recreational facility for the community, while a very vocal and insistent group of opponents claims that it would degrade the environment and open properties along the creek to undesirable users and influences. Identify some specific positive and negative aspects of the proposal. Would you be in favor of the proposal, if you lived in the city? Would it make a difference if you lived along the creek?"

Positive aspects of the greenway include economic growth of an area and a recreational facility for the community. Negative aspects include increased pollution, noise, traffic and possibly crime. In addition, it is unclear what would happen to property values along the creek. The city needs to demonstrate that the proposed project will not degrade the environment. If I lived in the city, I would be in favor of the proposal because of the increased recreational opportunities. If I lived along the creek, I would not be in favor of the proposal because I am not sure how the "greenway" will affect my property's value and my security.

Pro rata

Pro rata charges are used for special assessments, where owners pay a fair share for the assessment, usually based on street front footage.

4.13 With the following information, compute the property tax rate for the community. Total budget expenditures: $40 million, Total nonproperty tax income: $5 million, Total taxable value: $1 billion, Total exemptions: $250 million.

The tax rate is 4.67%

"The property tax has been criticized as an unfair basis for financing public schools. Areas that have high property values are able to pay for better schools than areas having lower property values. Thus, there is an inequality of educational opportunities that tends to perpetuate educational and social disadvantages for those who live in low-income areas. Do you agree or disagree? How could school financing be modified to provide more equal funding among all regions of a state?"

Utilizing property tax revenue to finance public schooling may create an inequality of education opportunities, assuming that the difference in tax revenue between wealthy and lower-income communities is not offset by other sources of revenue. This issue is further complicated by the fact that property values are local by nature and vary from community to community. School financing could be modified to a more standardized and equitable methodology, such as a statewide taxation and funding system rather than a local system. However, statewide school funding may tend to reduce local autonomy in schools, an adverse effect from the view of those school districts that are relatively self-sufficient. Countering this concern is the argument that citizens everywhere in a state benefit as the quality of the poorest educational opportunity is raised.

"The main argument traditionally advanced in favor of zoning is that it protects property values. Do you believe this contention? If so, how does zoning protect property values? If you do not believe the contention, why not?"

Zoning protects property values by ensuring that an undesirable land use will not exist in a residential or other non-compatible area. Zoning is intended to add predictability and stability to the land uses in an area. However, if a zoning plan conflicts with the natural economic land use pattern, it can cause inefficient distortions in land use. For example, zoning laws may force household services such as grocery stores, delicatessens or hair salons to be excessively distant from residential neighborhoods.

"A property owner who owes 8 mills in school taxes, 10 mills in city taxes, and 5 mills in county taxes and who qualifies for a $50,000 homestead exemption would owe how much tax on a property assessed at $180,000? "

divide mills by 1000. times taxable value

4.5 List three requirements of the courts for zoning to be a legitimate use of police powers.

three requirements for zoning to be a legitimate use of police power are that the ordinances are reasonable, based on a comprehensive plan, and provide for all types of housing.

4.2 Name two examples of monopoly affecting local land use.

two types of monopoly affecting local land use are natural monopolies such as utility companies and land holdouts.