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