Real Estate Principles Chapter 4

An example of market failure due to incomplete information is:

The buyer of a house doesn't know that the electrical wiring is aluminum, and prone to cracking

Conflicting views of best practice in urban planning include the choice between separating of residential from non-residential and mixed use.

True

A type of land use that has often been viewed as a threat to destabilize a single family, owner oriented neighborhood is

large numbers of student rental households in the neighborhood

An ad valorem tax is levied at rates between 1.0 and 4.0 percent of a property's __________ value.

market

True statements about the legality of zoning include

-It was upheld as a use of police power by the USSC in Euclid vs. Ambler Realty in 1922 -It must be based on a comprehensive plan -It must provide for a range of housing types and income levels

True statements about special assessments include:

-They are used to fund public improvements affecting a limited set of properties. -The assessments often are proportional to front footage of the lots involved. -Common applications are for sidewalks, street improvements, sewer extensions, etc.

Components that typically are in a community comprehensive plan include.

-a map of various uses within the community -plans for schools and other public facilities -allocation of land to various uses

Performance standards have been implemented for a wide variety of externalities in land use, including

-air quality effects from a land use -traffic generation by a land use -storm runoff

In zoning a non-conforming use

-cannot change in use of structure -cannot be discontinued more that a limited time -must have existed before the zoning was enacted

Counter arguments to zoning as a solution to real estate market failure include that zoning

-contributes to excessively low density of land use -creates inefficiency by separating residential from commercial activities

Common examples of partial exemptions for property taxes include exemptions for:

-disabled persons -veterans -historic property -widows

Features of the "revolution in land use controls" included a shift

-from little interest in land use controls to broadly requiring land use controls -from a perception of unlimited space and environment to a concept of "spaceship earth"

Characteristics of building codes include

-generally are regional rather than strictly local -address safety, health, and sanitation -continue to change with changing technology

Proposed changes in a zoning ordinance must:

-initially be presented to a planning or zoning commission -go before the elected officials for final judgement or ratification

Form based zoning

-is the most recent alternative to conventional zoning -replaces zoning by land use with zoning by development configuration or character

Public land use planning may have a weak foundation because

-it has a relatively very short history and base of experience -the notions of "best practice" are unsettled and changing

As site plan review board will

-make recommendations to the elected officials -review proposed subdivisions -review site plans for apartments or other commercial or industrial sites

Standard features of traditional zoning include:

-minimum lot dimensions -bulk limits for buildings -provision for special use districts

Toxic substances that have posed problems to property owners in the last two decades include:

-mold -leaking underground storage tanks -asbestos -radon

Example of market failure due to incomplete information about construction quality include:

-non-visible electrical systems once walls are closed in -inability to examine plumbing under a concrete slab floor

Types of property that commonly are exempt from property taxes include

-places of worship -other property of religious organizations -hospitals -schools and universities

Steps to creating a comprehensive plan typically include:

-projecting demand for public services -projecting demand for natural resources -projecting population growth

Zoning has been called a poor solution to land use market failure because it

-restricts the supply of lower priced housing -forces supporting business services away from the neighborhoods they serve

Three types of conventional land use controls are

-subdivision regulations -zoning -building codes

Events that triggered the "revolution in land use controls" included

-the Love Canal disaster -the environmental movement -publication of Rachel Carson's Silent Spring

Three conditions for a zoning variance are:

-the condition must be unique to the particular lot -the owner must show true hardship -the variance must not change the character of the neighborhood

Perceived threats to destabilize a single family, owner oriented neighborhood have included

-the presence of apartments or commercial activity in the neighborhood

An important process for any investor in property that could possibly contain toxic substances is Phase 1 Environmental Assessment. This procedure examines

-the property surface itself -air samples -water samples -property history

An example of conflicting notions of best practice in urban planning is

-uniform residential densities vs. mixed residential densities -grid street patterns vs. cul-de-sac streets

Use the following data to compute the property tax rate for an example taxing authority: Budget: $1,000,000 Non-tax revenue: $100,000 Total tax base: $100,000,000 Exempt property: $10,000,000 Answer _______% or ________ mills

1, 10

Assessed value typically is _____________ percent of market value, reflecting such factors as cost of selling a property

85-90

An example of market failure due to externalities is:

A water bottling plant consumes so much well water that it lowers the water table on neighboring land.

Developers normally regard the site plan review process as a friendly and predictable procedure.

False

An example of negative externalities is:

Reflective glass or roof material deflects light and heat onto adjacent properties

In contrast to property taxes, which are based on property value, special assessments are based more on equally sharing the total cost of improvements.

True

Property tax rates typically are stated not in percent but in mills, which are dollars per thousand dollars of value

True

To derive taxable value of a property from assessed value, subtract any applicable exemptions

True

The planning or zoning commission is appointed as an advisory board by the

elected governing body

In condemnation proceedings for eminent domain, the amount of compensation to the owner must be based on __________ and __________ use of the property at the time it is condemned.

highest, best

The main economic problem with uneven assessment for property taxes is

it arbitrarily shifts the tax burden onto properties with high assessments

The power of state and local governments in the United States to regulate in the interest of the health, safety, and welfare of citizens in general is known as:

police powers

The main attraction of performance standards is that they can address the problematic effects (externalities) of a land use more flexibly and efficiently than the approach of conventional zoning, which is ________________ of land uses

separation

Which of these is a natural monopoly?

sewer lines

A major reason for subdivision regulations is that usually the responsibility for maintaining streets and sewers eventually falls to

the local government

Eminent domain is the right of government to acquire private property, without the owner's consent, for public use, in exchange for just compensation

true

Generally, higher property taxes on a property tend to lower its value, while more resulting community services for the property tend to increase its value. In short, the effects of the property tax are captured or capitalized into the value of a property

true

If government activity or government restrictions reduce the value of a private property sufficiently, it is possible for the property owner to sue the government to force the government to acquire the property through eminent domain. This process is known as inverse condemnation.

true

In condemnation, the amount of compensation that restores the property owner to a financial position equivalent to that existing before the property was taken is called just compensation

true

In large measure, rather than using impact fees as a means of correcting externalities, local governments have tended to use the fees purely as a source of revenue

true

In most states, the computation of taxable property value must derive from market value

true

In recent decades the "public purpose" concept of eminent domain is claimed to have allowed misuse: encouraging local governments to use eminent domain to replace older private land uses with new ones simply to generate higher tax revenues

true

Planned Unit Development (PUD) allows residential density to range from single-family detached to multifamily, and often include supporting commercial development

true

Police power is the power of any government to regulate in the interest of the general health, safety, and welfare of the citizens

true

The amount of revenue that a jurisdiction must raise from property taxes is the difference between its total budget and its revenues from other sources

true

The legal procedure through which eminent domain is exercised is called condemnation

true

The narrowest view concerning the reach of eminent domain limits its scope to "public use," that is, for public facilities only, while the more common and broader view allows eminent domain to be used for "public purpose," meaning any use of clear public benefit

true

The primary means that Economists advocate to "internalize" externalities is by charging compensating fees

true

Three forms of conventional land sue controls are building codes, zoning, and subdivision regulations.

true

To find the property tax amount for a property multiply the taxable value by the total tax rate

true

failure to pay property taxes ultimately can lead to foreclosure and sale of the property at public auction

true

A national law that has imposed permitting requirements on millions of acres of land, has been brought to the United State Supreme Court, and that continues to stir great controversy, is the Clean ________ Act

water