REE3043 Exam 2
local economic activities
(secondary activities) activities in the city that serve local businesses and households are recirculating the income derived through base activities
Hazardous Materials
*toxic waste* - asbestos, fiberglass, leaking underground storage tanks (LUSTs), radon, and mold
largest of cities can provide lower risk to investors resulting from
- better chance of retenanting struggling real estate - a larger array of industries generating real estate demand - better transportation access - better access to market information
production revolution
- emergence of assembly lines - moved manufacturing to the suburbs - increasing recognition of growth of "footloose" industries that were not tied to rail lines, ports, or natural resources
where cities occur
- intersections of different modes of transportation: seaports, rivers, railroad and seaports intersections - born of mining and resource extraction: coal, oil, gas
Local Offices that can provide data regarding the local economic base
- local chamber of commerce - local planning agency - local economic development authority
Appraisal: Collect Data and Describe Property
- market context of the subject property - economic, demographic, regulatory, and geographic factors that may influence value - expected ROI on alternative investments, population, employment trends, existing and future land use data, and flood zone data - property-specific data: physical and locational characteristics and comparable transaction prices
transaction prices
- prices we observe on sold properties - appraisers and analysts observe transaction prices and use them to estimate the market value of similar properties
urban transportation revolution
- rise of the automobile - construction of roads and highways to support motor vehicles - emergence of truck and bus *bus: creation of lateral as well as radial passenger routes with flexibility of routes to accommodate change. *truck: growth and change in design and capacity since 1920
inverse condemnation
- substantially restriction the use of private property due to new public projects or regulatory actions - initiated by a property owner against the govt to recover the loss in property value attributed to govt activity
Appraisal: Identify the Problem
- the intended use of the appraisal - the purpose of the assignment - the effective date of the valuation - relevant characteristics of the property - important assumptions, conditions, or limitations
investment value
- the value a particular investor places on a property - based on the unique expectations of the individual investor, not the market in general - buyer's maximum buying price and seller's minimum selling price
Appraisal: Determine the Scope of Work
- work performed must be consistent with the work that a typical appraiser would perform in conducting a similar assignment - must be clearly described and any deviations from the standard approach must be explained - time and personnel requirements must be clearly defined - data and procedures used to complete each task should be provided
building codes
-earliest use of police power to regulate land use -specifications for fire safety -minimum specifications for structural strength and integrity -standards for safety, health, and sanitation -stairways, elevators, water pipes, fixtures and sanitary plumbing must meet requirements of safety, integrity and durability - applied at the state and regional level ** respond to changing technology and to changing priorities of society - "green standards"
market value
-its most probable selling price assuming normal sale conditions -the value the typical participant would place on a property
A/C, Lighting and New Forms of Retailing and Offices
-operate buildings without direct sunlight = fluorescent lighting - eliminate window ventilation = A/C - radical changes toward much larger floor plans for structures *supermarket, shopping center, office buildings
counterarguments to land use controls
-private restrictions: restrictive covenants, easements, and owner associations -zoning may restrict the supply of modestly priced housing -contribute to urban sprawl -conflict with the natural economic land use pattern, inefficient distortions in land use
Complying with USPAP
1) identifying appraisal problem 2) determining the required scope of work 3) collecting data and describing property 4) data analysis, including market analysis and highest and best use analysis 5) determining the value of the land 6) applying the valuation approaches 7) reconciling the indicated value that results from the multiple approaches to valuation 8) preparing the appraisal report for submission to the client
criteria for rezoning requests
1. Will the new zoning by compatible with the comprehensive plan? 2. should the comprehensive plan be modified? 3. What effect will the new zoning have on surrounding land uses and on the larger community?
concentric ring model
Burgess = creator -center of the ring is CBD -adjacent is a zone of transition containing warehousing and industrial use -followed by a ring of lower income residential -followed by a ring of middle- and upper- income land use **difference from bid-rent model: lower income is closer to CBD than higher-income -higher income households want sufficiently larger lots -higher- income households will tend to leave older houses, allowing them to "filter down" to lower income housing and move to the perimeter to build new housing
positive externalities
beneficial effects on property value from: - exceptional vistas, nearby parks and recreation facilities, quality school and architecture, attractive commercial areas, well-kept landscapes, etc.
urban service areas
boundaries are delineated around a community within which the local govt plans to provide public services and facilities
board of adjustmeent
charged with reviewing petition for variances. Determine whether the three conditions for relief are met. If so, they will grant the variance **determination of the board are final, can only be appealed in court
natural monopolies
city, water, sewer and other utility systems - costly to establish competition
budget
estimating all proposed expenditures of each unit within the jurisdiction -estimates revenues from non tax sources such as license fees, inspection fees, garbage removal fees, fines, etc.
nonconforming uses
existing land uses that are allowed to continue existing despite the change in classification provided that they are never discontinued, the structure is not destroyed or substantially altered. -amortized away over a period of years
nonpayment of property taxes
foreclosure process: 1. list of delinquent taxpayers are published in a newspaper of general circulation and delinquents are given a grace period to pay back tax, interest and penalties. 2. if not paid, properties are sold at public auction with proceeds first used to pay back taxes
concurrency requirement
further development at the local level must be prohibited unless adequate infrastructure and public services are in place
comprehensive plan
general guide to a community's future growth and development - involves projecting the future population growth, requirements for water and resources, physical characteristics, need for public services, and need for various types of land use
tax-exempt properties
govt owned properties and others exempted by state law or state constitution -universities, schools, hospitals, places of worship, or other property of religious organizations * exempt properties lower the tax base of the community, and raise taxes for other property owners
industry economies of scale
growth of a particular industry within a local area can create specialized resources for that industry leading to a production cost advantage.
linkages
how land use types differ in their locational needs -demand for access between one urban activity and others
bid-rent model
how land users bid for location depends on how much the person makes per hours how fast is the average travel time commuting ** multiple types of households: walkers vs drivers** - reveals how two different land uses with different intensities of need for access will get sorted out on the urban map
homestead exemption
if the property owner occupies a home as the family's principal residence and has claimed residency within the state, the property may be regarded as the family's homestead. * in FL, may qualify for up to $50,000 off your assessed valuation before taxes are calculated
Uniform Standards of Professional Appraisal Practice (USPAP)
imposes ethical obligations and minimum appraisal standards that must be followed by all professional appraisers -updated biannually
incomplete information
inability to assess quality of construction and safety hazards in a structure - solution: --building codes -- subdivision regulations: ensure minimum street design standards for traffic safety, fire hydrants and firefighting access, etc.
Impact fees
internalize externalities by charging compensating fees - pay an impact fee equal with the externality costs to the community **often treated as a source of revenue
site plan review board
involve a diversity of views, interests, and voices, including the general public. open and informal process, leaving ample room for the unexpected, for misunderstandings and clashes in views Seen by developers as one of the riskiest points in the development process.
quality of life and leadership
knowledge-intensive firms are sensitive to quality of life issues - want to be where community can provide their employees with an enriching and satisfying lifestyle. - require support of strong local leadership and government to improve the "cost of doing business"
condemnation
legal procedure for eminent domain
special assessments
levied to pay for specific improvements that benefit a particular group of properties - pro rata charges, not ad valorem, to cover the cost of the improvement - EX: cost of constructing new sidewalks in subdivision may be shared equally by all the parcels or perhaps relative to the size of their lot frontages
zoning
main approach to land us regulation in the US since 1920s 1. land use classification list: categories such as single family residential, multi-family residential etc as well as subcategories according to local needs 2. map showing zoning classification of all areas within the county involved 3. minimum front, rear, and side setback requirements from boundaries 4. building bulk limits, including size, height, footprint, and placement 5. minimum lot dimensions 6. provision for special use districts 7. zoning board or commission appointed to oversee administration of ordinance or make recommendations regarding rezoning requests or proposed changes 8. zoning board of adjustment appointed to review hardship cases
just compensation
market value of the property if completely taken or the total alue of all financial loss if partially taken. - value based on its highest and best use at the time it is condemned, not necessarily its current use. - amount that restores property owner to a financial position equivalent to that existing before the property owner to a financial position equivalent to that existing before the property was taken - includes value of property taken and diminution in value of any property remaining
affordable housing allocation
must encourage or mandate a "reasonable and fair" component of new housing construction for lower income families
exclusionary zoning
ordinances that tend to exclude lower income groups by large lot size of that do not adequately provide low- and moderate-income housing.
congestion
pervasive form of externality in urban life -when an individual uses any system near capacity and slows the performance of the entire system for all users.
labor force characteristics
plant and company location decisions attest to the importance that companies give to the character of the available labor force in selecting location
tax base
population in the jurisdiction
extraterritorial jurisdiction
power to plan and control urban development outside their boundaries until annexation can occur.
Data Processing and Communication
problem= separation of management from the production process - solution: reliable and efficient telephone, then emergence of high-speed data processing and reporting (first electronic transmission then wireless technology)
subdivision regulations
promote the proper arrangement and coordination of streets in relation to existing or planned streets and to assure coordination of subdivisions with the local comprehensive plan. guidelines for: - layout of lots - adequate and convenient provision of open spaces, utilities, recreation and access for service and emergency vehicles. - assure adequate provision of water, drainage, sewer, and other sanitary facilities
criticism of tax: regressive property tax
property tax of lower income houses is higher than that of higher income houses as a percent of their incomes. However, depends on how the resulting public services are distributed across income levels (lower income households use more police protection, fire protection, public schools, etc)
public use
public facilities only
criticism of tax: property tax is poorly administered
quality and uniformity of assessing procedures can be less than ideal because the appraisers are elected officials with no required qualifications. -owners of higher value property may be able to submit more sophisticated appeals and exert influence on favorable appraisals
location quotient
quick indicator of a community's economic base -excessive concentrations of employment in a particular industry must indicate that the industry is producing surpluses for export 1. compute the % of total employment in a given industry = 20% 2. compute the % of given industry employment for a reference population = 9% 3. compute quotient: the ratio of local to reference percentage = 20/9
variance
relief mechanism for zoning cases where the regulations impose exceptional hardship and loss of value 3 conditions: 1. owner must show true hardship in terms of inability to use the lot as zoned 2. must be unique to the lot and not a condition common to other parcels in the vicinity 3. variance must not materially change the character of the neighborhood.
comparison activities
retailing activities where you wish to go from one competitor to another in one trip
eminent domain
right of the government to acquire private property without the owner's consent for public use in exchange for just compensation **arises from practical necessity of govt to provide basic public services.
Phase I Environmental Value Assessment
sampling air and water sources, search of property records, visual inspection of property
economic base
set of economic activities that a city provides for the world beyond its boundaries (export base)
uncertainty and value stability
solution - residential zoning to achieve value stability
smart growth
solution to conflicting ideas of best practice in land use 1. mixed land uses 2. compacting building design 3. housing opportunities and choices for household types 4. walkable neighborhoods 5. distinctive, attractive communities with strong sense of place 6. preservation of open space, farmland, natural beauty, etc 7. reinvestment in and strengthening of existing communities 8. provision for a variety of transportation choices 9. predictable, fair and cost-effective development decisions 10. citizen and stakeholder participation in development decisions
economic and environmental impact statements
studies that analyze the project's effect on surrounding areas.
new urbanism
subscribes to smart growth components but adds certain focuses -advocates a traditional grid pattern of development designed to give pedestrian life priority over vehicles - promotes walking, biking, and mass transportation
criticism of tax: uneven across geographic areas and property types
tax may vary from county to county, property to property and state to state. some states such as California have enacted constitutional provisions or laws to limit taxes (CA in 1978 limited tax rate to 1%)
mills
tax rate unit dollars per $1,000 of value
agglomeration economies
the emergence of specialized resources in response to demand from multiple industries -effect on market risk: have greater capacity to withstand industry downturns - causes institutional investors to favor real estate investments in large urban markets
need for access
the gravity that draws economic activity into forming cities
police power
the right of government to enact laws to protect the general health, welfare, and safety of the public - authority of state and local governments to regulate land use and enforce development and construction standards
planned unit developments
traditional requirements, such as setback requirements and apartment densities, are allowed to vary in some areas in exchange for enhancements such as larger areas of open space and nature preservation, public facilities and neighborhood strengthening designs. - allow residential density to range from single family detached to multifamily and often include supporting commercial development
negative externalities
unaccounted negative effects of a land us on the value of surrounding properties -factory smoke and emissions, traffic congestion, crowding of schools, crime from low-income apartments, student housing
appraisal
unbiased written estimate of the market value of the subject property at a particular time
externalities
unintended and unaccounted for consequences of one land user upon others. EX: traffic delays, noise, storm runoff, light pollution EX: incomplete information
convenience activities
users seek to obtain the good or service from the closest available resource EX: bakeries, hair salons, supermarkets, fast food, dry cleaners, coffee, etc.
assessed value
value for taxation - always related to market value, taxable value is usually 100% of assessed value
regulatory taking
while property can be regulated to a certain extent, if regulation goes too far it will be recognized as taking ** must be severe for compensation, often refused
appraisal report
document the appraiser submits to the client and contains the appraiser's final estimate value, the data upon which the estimate is based, and the reasoning and calculations used to arrive at the estimate
Comprehensive Environmental Response Compensation and Liability Act (CERCLA) 1980
Established the "Superfund," and gave EPA authority to clean up abandoned or uncontrolled toxic sites.
Clean Water Act, 1972 - 1977
Gave EPA authority to control discharges of pollutant into waters of the United States **farthest reaching - imposed permitting requirements on millions of acres of wetlands
Safe Drinking Water Act 1974
Gave EPA authority to implement quality standards for drinking water
Toxic Substances Control Act 1976
Gave EPA authority to monitor and control 75,000 industrial chemicals, and new ones that are created
Clean Air Act 1970
Gave EPA authority to set National Ambient Air Quality Standards
Resource Conservation and Recovery Act 1976
Gave EPA cradle to grave authority over handling hazardous waste
multinuclei city
Harris and Ullman design -caused by motor vehicles and other technology, cut ties to the CBD
sector model of urban form
Homer Hoyt design **no longer valid - characterized by railroads for intraurban transportation -characterized by radial corridors or wedges, particularly for higher-income residential land use. - lower income housing in areas opposite the CBD from high-income corridor, typically adjacent to industrial areas.
Formula for Tax Rate
R = (Eb-Io) / (Vt-Vx) R = tax rate Eb = budget expenditures Io = income from other sources Vt = total assessed value of all properties Vx = the value of property exemptions
clustering
a lot of the same type of establishment in the same area
economic base multiplier
activities and services bring money into a city, which then is respent and recirculated within the city. - employment is an important measure of multiplier impact **factors that affect the power of the multiplier: - as cities grow, they tend to provide more of their own local goods and services - sometimes money can leak out of the local community when goods must come from another place or country - retirement: retirement income spent purchasing local housing and local services - computer assembly: low multiplier because computers tend to be manufactured in the third world and shipped to the US
performance standard
address concerns for urban systems such as traffic, watershed, green space, air quality, etc. - EX: storm runoff can be controlled by requiring that runoff from a parcel of land be no greater after development than before - EX: tree canopy can be preserved by requiring permits to remove trees of a certain size or character. ** ability to offer a more flexible substitute to the traditional separation of land uses
effective tax rate
amount of tax paid divided by the market value -taxes among properties and taxing jurisdictions are best compared using effective tax rate
public purpose
any purpose of clear public benefit **intended fro civic and convention centers, cultural centers, trade facilities, hotels, and sports facilities even if owner is going to be private
ad valorem taxes
applied in relation to the value of the property - charged to property owners by each taxing jurisdiction in which the property is located - usually between 1 and 4% of market value - used to finance public services
planning/zoning commission
appointed by the elected governing body to oversee implementation of the zoning or subdivision ordinance. **make recommendations to the elected governing body
revolution in land use controls
as late as mid 1960s public interest in land use controls (zoning) was minimal. starting in 1970 the environmental movement changed the perspective to "spaceship earth," a closed system of limited space, air water and resources
Kelo v. New London, Connecticut
controversial supreme court case over the abuse of the public purpose argument. Court upheld the right of the city to condemn the well-kept residences of Kelo and six other homeowners in order to create a mixed-use complex supporting Pfizer **left open that laws could be enacted to restrict such use of eminent domain -- 44 states took up legislation or amendments to restrict eminent domain, over half enacted restrictions
tax assessor
county property appraiser - appraises all taxable properties in a jurisdiction for a property tax assessment
form-based zoning codes
creates a map by segregation of building shapes - several different models - packages of building designs and street/public space designs- are formulated. - each model will extensively prescribe aspects of building character such as . range in number of floors, minimum street-side windows, etc. - uses will be limited simply by the features of the model rather than by explicit restrictions
central place pattern
disperse of locations over the region of potential customer units to the point where each establishment is equidistant from any other and they are separated by the minimum distance that allows sufficient customers to support each establishment **honeycomb of hexagonal markets with an establishment at the center of each cell
tax rate
depends on the jurisdiction's budget and the value of its tax base * also known as millage rate
urban sprawl
development taking place in rural areas well beyond the urban fringe - leapfrog development causes taxpayers to have to subsidize the extension of services out of the urban areas