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