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Tax-exempt Land
In many cities, much of the best land is off the tax
rolls. Colleges, universities, hospitals, municipal and
other government buildings tend to be centrally located.
The presence of their employees and customers helps to
make the surrounding properties particularly valuable
places to conduct business. When a signficant share of
the downtown is occupied by entrenched tax-exempts, those
who need a central location to conduct their business
must pay higher rents to landlords who own the scarce
remaining sites. Churches and their affiliates also
occupy prime downtown land. Sometimes they provide a wide
variety of social services, including services to the
low-income portion of the population, who are severely
burdened by the high rents they must pay in most cities;
sometimes all they provide are worship opportunities and
social events for their members — and few jobs.
Downtown parks also tend to make the surrounding
properties far more valuable than they would otherwise
be, with the most extreme effects on selling prices
falling off within a few hundred feet.
When a church or a college or other tax-exempt entity
decides it no longer needs a piece of land, should the
tax-exempty entity get the full proceeds of the sale of
that land, or should some portion of that huge gain be
returned to the commons? Is paying 5 years' worth
of back property taxes sufficient compensation to the
commons? 10 years' worth? More? Should the
entire gain go to the community?
Tax-exempt properties receive a lot of services from
the taxpayer: police and fire protection and other
emergency services, not to mention the schools which
provide the employees who carry out their missions.
I would advocate not placing any property taxes on the
buildings owned by those properties that are
currently tax exempt, but it doesn't seem unreasonable to
ask them to pay the commons for the use of their site,
just as we ask others to pay as a function of the value
of their sites. Might this cause some of them to sell off
a portion of their underused holdings, or even relocate
outside the central business district? Possibly. They
might find that if they needed to make a business
decision about their land, they would be led to use
less-choice sites, freeing the centrally located property
for the use of the private sector.
Mason Gaffney: Land
as a Distinctive Factor of Production
Land is traditionally subject to a host of legal
and customary limits on use and ownership.
Covenants are found in land titles: seldom in titles to
cars or canned goods. Divided ownership is common,
there is so much about land to be owned.
There are easements through, air rights over, mineral
rights under, and neighbors and zoning all around any
parcel of land. Changing lot lines is unavoidably a
social process, there is no other way.
A large share of the more valuable land in cities
is held by estates. Public and eleemosynary
[non-profit] holders are preferentially tax exempt and
often without any visible motive to economize.
Water licenses are held subject to "use it or lose it"
traditions leading to appalling waste.
Broadcasting/telecasting licenses are highly
political. And so on. Only a resource with
the characteristics of land could be subject to such a
wide range of non-economic pressures. ...
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related
themes:
urban land
values relative to rural, assessment,
land
different from capital, parks,
underused
land,
hole in the
ground,
highest and best
use,
all
benefits...,
absentee
ownership,
location, location,
location,
the 100%
location,
eminent
domain
, sprawl,
wealth from
land appreciation,
land
concentration,
wealth
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revenue not
primary,
job
creation,
full
employment
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