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Non-uniform real estate taxation: a case study of the consequences Ward, Laurence William Percy 1973

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NON-UNIFORM REAL ESTATE TAXATION: A CASE STUDY OF THE CONSEQUENCES by LAURENCE WILLIAM PERCY WARD B. A., Unive r s i t y of Saskatchewan, 1966 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF Master of Arts i n the SCHOOL of COMMUNITY AND REGIONAL PLANNING We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA May 1973 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y a v a i l a b l e for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholar l y purposes may be granted by the Head of my School or by his representatives. It i s understood that copying or p u b l i c a t i o n of t h i s thesis f o r f i n a n c i a l gain s h a l l not be allowed without my written permission. School of Community and Regional Planning The University of B r i t i s h Columbia Vancouver 8, Canada Date i i ABSTRACT This thesis examines the general subject of r e a l estate property taxation and the s p e c i f i c problem of eval-uating the consequences of c e r t a i n taxation p o l i c i e s . The administration of r e a l estate property taxation i n North America i s examined by means of a l i t e r a t u r e review. P a r t i c u l a r emphasis i s placed on the c r i t i c i s m that has been directed at the tax on the basis of administration and the nature of the tax. The problem of non-uniformity of tax-a t i o n and i t s consequences i s examined i n great d e t a i l . The sources of the problem and proposed remedies are reviewed and the methods of analysis are subjected to a c r i t i c a l analysis. The economic c h a r a c t e r i s t i c s of r e a l estate prop-erty taxes are analysed, drawing p a r t i c u l a r attention to the diff e r e n c e between the e f f e c t s of a tax on land and a tax on improvements. Taxes on land and improvements are evaluated i n terms of t h e i r e f f e c t s on property values, rents, invest-ment decisions and development. Land assessment practices i n a residential-business t r a n s i t i o n zone adjacent to the central business d i s t r i c t i n Regina are examined i n d e t a i l , r e l a t i n g the assessed values to estimated market values. Assessed land values, expressed as percentages of estimated market value i n the t r a n s i t i o n zone are compared to assessed land values i n developing r e s i -d e n t i a l subdivisions also expressed as a percentage of the estimated market value. Land assessment rates i n the trans-i i i i t i o n zone are adjusted to approximately the same percentage of estimated market value as the land assessment rates i n the developing subdivisions and the e f f e c t of t h i s change on the d i s t r i b u t i o n of taxes i s calculated. The e f f e c t s of the r e d i s t r i b u t i o n of taxes i s evaluated using economic and r e a l estate property taxation theories. The examination i s l i m i t e d to a q u a l i t a t i v e ana-l y s i s due to the lack of data which prevents the formulation of mathematical models that are capable of making quantitative predictions. In conclusion, although the methods employed to analyse the under- assessment of land i n one part of the c i t y do provide some i n d i c a t i o n of the consequences of the p o l i c y , the i n a b i l i t y to make quantitative judgements l i m i t s t h e i r a p p l i c a t i o n as p o l i c y implementation tools. i v TA3LE OF CONTENTS Page Chapter I An I n t r o d u c t i o n To The Problem and the Research Methodology 1. The Problem And I t s Importance f o r Community and R e g i o n a l P l a n n i n g 1 2. Hypothesis 3 3. Research Methodology 4 4. Data C o l l e c t i o n and A n a l y s i s Methodology 6 Chapter I I Real E s t a t e P r o p e r t y Taxes: A G e n e r a l D e s c r i p t i o n I n t r o d u c t i o n 10 P a r t I 1. Real E s t a t e P r o p e r t y T a x a t i o n i n North America "'• 11 2. C r i t i c i s m o f Real E s t a t e F r o p e r t y Taxes 12 3. Real E s t a t e P r o p e r t y Taxes and E q u i t y 12 4. N e u t r a l i t y o f Real E s t a t e P r o p e r t y Taxes 13 5. Taxing B u i l d i n g Values 14 6. Proposed Remedy f o r the U n d e s i r a b l e Aspects o f Real E s t a t e P r o p e r t y Taxes 14 7. Non-uniformity o f Real E s t a t e P r o p e r t y Taxes 16 8. Non-uniform Real E s t a t e P r o p e r t y T a x a t i o n W i t h i n T a x a t i o n \ J u r i s d i c t i o n s 17 9. Causes of Non-uniform T a x a t i o n 17 10. The B a s i s f o r C r i t i c i z i n g Non-Uniform Real E s t a t e T a x a t i o n W i t h i n a Tax J u r i s d i c t i o n 20 P a r t II The Economic Nature, and Consequences o f Real E s t a t e P r o p e r t y Taxes 23 1. The Economic D i s t i n c t i o n Between Land and Improvements 23 2. Taxes on Land and Improvements 24 3. The E f f e c t o f Real E s t a t e P r o p e r t y Taxes on Rents and P r i c e s 25 4. The E f f e c t o f Real E s t a t e P r o p e r t y Taxes on P r o p e r t y Values 26 5. Who Bears the Burden o f Real E s t a t e P r o p e r t y Taxes? 26 6 . Real E s t a t e P r o p e r t y Taxes, Investment D e c i s i o n s and Urban Development 27 V TABLE OF CONTENTS (continued) Page 7. Real Estate Property Taxes and Speculation 28 8. Real Estate Property Taxes and the Intensity of Land Use 30 9. Real Estate Property Taxes and Urban Renewal 32 Chapter III Real Estate Property Taxation i n Regina: P o l i c y and Practice 1. The P o l i c y 38 2. The Study Area 40 3. The Practice of Assessing Land Value f o r Taxation i n the Study Area " 42 4. The S e l l i n g P r i ce of Land i n the Study Area 45 5. The S e l l i n g Price of Residential Land i n Developing Subdivisions 46 6. The Assessment of Res i d e n t i a l Land i n Developing Subdivisions 49 7. Assessed Land Values Expressed as a Percentage of Sales P r i c e 50 Chapter IV Non-Uniform Land Assessment and Its Consequences 1. Introduction 54 2. Uniformity of Land Assessment Within the Residential-Business T r a n s i t i o n Zone 54 3. Uniformity of Land Assessment i n the Residential-Business T r a n s i t i o n Zone Relative to Developing Residential Subdivisions 56 4. Under Assessed Land Values, The Tax Base and the H i l l Rate 59 5. R e d i s t r i b u t i o n of Taxes i n the Residential Business T r a n s i t i o n Zone 61 6. Red i s t r i b u t i o n of Taxes Throughout the C i t y 66 7. The Consequences of Redis t r i b u t i n g the Real Estate Property Tax i n Regina 72 8. Property Values 72 9. Rents 73 10. The D i s t r i b u t i o n of Wealth 74 11. Production and Consumption of Building Space 75 v i TABLE OF CONTENTS (continued) Page 12. Investment Decisions 76 Chapter V A C r i t i c a l Evaluation of the Study 1. Introduction 79 2. V e r i f i c a t i o n of the Hypothesis 79 3. Achievement of Objectives 81 4. The Si g n i f i c a n c e of the Study for Community and Regional Planning 81 5. Limitations of the Study 83 6. Recommendations for Further Study 84 Bibliography 86 v i i LIST OF TABLES Table Page I.............Land Use i n the R e s i d e n t i a l -Business T r a n s i t i o n Zone 40 I I . , . . 1970 Assessed Land Values i n the Residential-3usiness T r a n s i t i o n Zone 43 III Land Sales i n the Residential-Business T r a n s i t i o n Zone 47 IV Land Sales i n Albert Park Subdivision 48 V..., Land Sales i n Glencairn Subdivision 49 VI Assessed Land Values i n the Residential-Business T r a n s i t i o n Zone Using a Uniform Assessment Rate of'$250 per Front Foot 60 VII The D i s t r i b u t i o n of Taxes Within the Residential-Business Zone Using the 1970 Assessment Rates and M i l l Rate 62 VIII The D i s t r i b u t i o n of Taxes Within the Residential-Business T r a n s i t i o n Using a Uniform Assessment Rate of $250 per Front Foot 63 IX ..Changes i n the D i s t r i b u t i o n of Taxes Within the Residential-Business T r a n s i t i o n Zone Due to Under Assessing Land i n the T r a n s i t i o n Zone 64 X The D i s t r i b u t i o n of Taxes Using the 1970 Assessment Rates and M i l l Rate 68 XI .The D i s t r i b u t i o n of Taxes Using a Uniform Land Assessment Rate of $250 per Front Foot i n the Re s i d e n t i a l -Business Zone 69 XII ...Changes i n the D i s t r i b u t i o n of Taxes Due to Under Assessing Land Value i n the Residential-Business T r a n s i t i o n Zone 70 v i i t LIST OF FIGURES Page The Location of the T r a n s i t i o n Zone 41 Taxation Areas 67 ACKNOWLEDGEMENT I wish to acknowledge the assistance provided by Professor B. Wiesman, whose advice, encouragement and patience made the completion of t h i s thesis possible. .1 C H A P T E R I AN INTRODUCTION TO THE PROBLEM AND THE RESEARCH METHODOLOGY 1, The Problem and Its Importance For Community and Regional Planning;  A problem which i s found i n many North American communities i s the somewhat haphazard manner i n which r e a l estate property taxation i s administered. For the most part r e a l estate taxation i s i n the hands of assessment o f f i c e r s and p o l i t i c i a n s whose objective ; f o r administering the taxes i s p r i m a r i l y to r a i s e the required revenue with a minimum of public o p p o s i t i o n . 1 The ef f e c t s that taxation p o l i c i e s have on how r e a l estate resources are all o c a t e d or used and how wealth i s d i s t r i b u t e d are for the most part ignored or relegated to secondary positions of importance. In other cases, conscious attempts to make r e a l estate taxes e f f e c t -ive i n promoting p a r t i c u l a r development objectives, or to r e l i e v e the burden of taxation on a p a r t i c u l a r category of property owners, a l l too often f a i l to take secondary e f f e c t s into consideration. One example of t h i s narrow approach to r e a l estate taxation i s the p o l i c y of assessing land on the urban frin g e on the basis of the e x i s t i n g a g r i c u l t u r a l use, rather than market value to prevent excessive subdivision. This p o l i c y has the undesirable consequence of encouraging speculation that r e s u l t s i n r i s i n g land prices and unearned 2 c a p i t a l gains f o r the speculators. The end r e s u l t of the aforementioned practices i s frequently a s i t u a t i o n i n which many d i f f e r e n t rates of r e a l estate taxation are found with-i n a s i n g l e tax j u r i s d i c t i o n , the consequences of which fo r 3 the community as a whole are unknown. A review of the l i t e r a t u r e r e l a t i n g to r e a l estate taxation reveals that few attempts have been made to form-ul a t e an a n a l y t i c a l methodology to evaluate the consequences of non-uniform r e a l estate taxation p o l i c i e s . The most frequently employed method i s to assume that uniform tax-a t i o n r e s u l t s i n the economic optimum p o s i t i o n of resource a l l o c a t i o n and the equitable d i s t r i b u t i o n of tax burden, thus making a l l deviations from uniformity economically undesirable.^ C r i t i c s of t h i s approach maintain that i n c e r t a i n instances i t may well be a v a l i d method but that i t i s not u n i v e r s a l l y applicable and each instance of non-uniform taxation should be evaluated on i t s own merits, to determine i t s consequences with regard to the d i s t r i b u t i o n of the burden of taxation, wealth and the a l l o c a t i o n of resources.^ In summary, the problem to be investigated i s the existence of non-uniform r e a l estate taxation p r a c t i c e s , the e f f e c t s of which are unknown, and the lack of an appropriate methodology to evaluate them. The importance of t h i s problem fo r community and regional planning emanates primarily from the concern of planning i n the manner i n which our physical resources are 3 used, how our communities develop and the manner i n which these factors influence the q u a l i t y of human l i f e . Develop-ment of a c i t y or region i s to a large extent the product of a multitude of private investment decisions that are made on the basis of the p r o f i t motive and, as r e a l estate taxes a f f e c t the income p o t e n t i a l of r e a l estate they can influence investment decisions and development.^ The importance of the problem i s emphasized by the f a c t that most of man's a c t i v i -t i e s have a r e l a t i o n s h i p with r e a l estate i n some form and therefore the way that r e a l estate i s developed or used po-t e n t i a l l y influences a l l of the residents of a community i n both economic and s o c i a l terms.'' Examining the e f f e c t s of r e a l estate taxation pract-ices can be b e n e f i c i a l to community and regional planning by contributing toward a greater understanding of the forces which influence development, and by serving as a basis f o r the formulation of taxation p o l i c i e s to be used f o r p o s i t i v e control of development. The objective of the study i s f i r s t , to provide some in s i g h t into the complex and f a r reaching e f f e c t s that one r e a l estate taxation p o l i c y i s capable of generating, and secondly, to demonstrate how e x i s t i n g economic and taxation theories can be employed to examine r e a l estate taxation p o l i c i e s f or the purpose of evaluating t h e i r consequences. 2. Hypothesis Under-assessment of land value i n the r e s i d e n t i a l -4 business t r a n s i t i o n zone adjacent to the central business d i s t r i c t i n Regina, r e l a t i v e to the land assessment p r a c t i c e i n more recently developed r e s i d e n t i a l subdivisions, r e s u l t s i n a r e d i s t r i b u t i o n of the burden of taxation which influences the d i s t r i b u t i o n of economic wealth, the a l l o c a t i o n of r e a l estate resources and development throughout the c i t y . 3. Research Methodology A comprehensive examination of r e a l estate taxation i n the C i t y of Regina i s too complex a subject to be handled within the scope of t h i s t h e s i s . Realizing t h i s l i m i t a t i o n , the focus of the thesis i s directed toward analyzing only one taxation p o l i c y . The research methodology employed to study the e f f e c t s of r e a l estate taxation consists of two related parts. F i r s t , by means of a l i t e r a t u r e review, the economic and administrative c h a r a c t e r i s t i c s of r e a l estate taxes and relevant economic theories are examined to determine how the d i s t r i b u t i o n of wealth are affected by taxes on land and im-provements. Major topics which w i l l be covered are, the e f f e c t s that r e a l estate taxes on land and improvements have on rents, property values, r e a l estate investment decisions and development. The second part of the research consists of a case study examination of the practice of assessing land value for the purpose of r e a l estate taxation i n the r e s i d e n t i a l - b u s i -ness t r a n s i t i o n zone adjacent to the central business d i s t r i c t of Regina, and an evaluation of the consequences. The r a t i o 5 of assessed land value to estimated market value i n the residential-business t r a n s i t i o n zone, i s compared with the r a t i o of assessed land value to estimated market value i n two recently developed r e s i d e n t i a l areas, to determine the degree of uniformity of taxation. The assessed value of land i n the residential-business t r a n s i t i o n zone under the e x i s t i n g assessment p r a c t i c e and what i t would be i f i t were assessed at the same proportion of estimated market value as land i n recently developed r e s i d e n t i a l areas i s then c a l -culated. The assessed value of land i n the t r a n s i t i o n zone, i f i t i s assessed at the same proportion of estimated market value as recently developed r e s i d e n t i a l areas, i s then used to c a l c u l a t e a new tax base for the c i t y as a whole. The new tax base t o t a l i s then used to c a l c u l a t e a new m i l l rate for the base year 1970 and t h i s m i l l rate i s used to ca l c u l a t e the amount of r e a l estate taxes that property, both i n the t r a n s i t i o n zone and the area outside, would be subject to on the basis of the new tax base. The new tax l i a b i l i t y of a l l property i s then compared with the tax l i a b i l i t y i n 1970, under the e x i s t i n g land value assessment p r a c t i c e s , to determine the changes i n the burden of r e a l estate taxation that r e s u l t when land i n the t r a n s i t i o n zone i s assessed at the same proportion of estimated market value as land i n recently developed r e s i d e n t i a l subdivisions. The changes i n the burden of r e a l estate taxation are then analyzed and the e f f e c t s that the changes have on rents, property values, 6 r e a l estate investment decisions and development are evaluated by employing the c h a r a c t e r i s t i c s of r e a l estate taxes i n f o r -mation and relevant economic theories that are described i n the l i t e r a t u r e review. The s h i f t i n the burden of taxation that r e s u l t s from the change i n the practice of assessing land value i s described i n quantitative terms, but the e f f e c t s of the s h i f t are only described i n q u a l i t a t i v e terms because i n s u f f i c i e n t inform-a t i o n i s a v a i l a b l e at the present time to formulate a precise mathematical model that i s capable of predicting the magnitude of the e f f e c t s . The evidence presented, regarding the s h i f t i n the burden of taxation and the r e s u l t i n g e f f e c t s of the s h i f t , i s then evaluated to determine the degree to which the hypo-thesis can be v e r i f i e d . Analysis of the methodology employed to examine the consequences of non-uniform land assessment practices i s undertaken to evaluate i t s a p p l i c a b i l i t y as an a n a l y t i c a l t o o l f o r the study of e x i s t i n g r e a l estate taxation practices and for t e s t i n g proposed taxation p o l i c i e s . Defects and short-comings of the methodology are then described and d i r e c t i o n s for future research are proposed. 4. Data C o l l e c t i o n and Analysis Methodology The f i r s t stage of data c o l l e c t i o n and analysis i n -volves an examination of land sales information f o r two de-veloping r e s i d e n t i a l subdivisions and the residential-business t r a n s i t i o n zone. Records of land sales which are maintained 7 by the C i t y Assessor's department provide the basis f o r es-timating the market value of land i n both the developing r e s i d e n t i a l subdivisions and the t r a n s i t i o n zone. The mean sale p r i c e for land i n each of these three areas i s calcu-lated and used as an estimate of market value. The assessed value of land i n the two r e s i d e n t i a l subdivisions i s a v a i l -able from land assessment maps i n the C i t y Assessor's depart-ment, since the land assessment i s constant throughout each subdivision. The assessed value of land i n each subdivision i s then expressed as a percentage of estimated market value. The assessed value of land i n the residential-business t r a n s i t i o n zone varies according to the use of the land, so a d e t a i l e d examination of the assessment r o l l i s required to determine the assessed value of land for each use. The assessed value of land f o r each type of use i s expressed as a percentage of the estimated market value f o r the purpose of comparing land assessment i n the t r a n s i t i o n zone to that i n the r e s i d e n t i a l subdivisions. The assessed value of a l l the land i n the r e s i d e n t i a l -business t r a n s i t i o n zone i s then changed so that i t bears approximately the same r e l a t i o n s h i p to the estimated market value as assessed value does to estimated market value i n the r e s i d e n t i a l subdivisions. The e f f e c t that t h i s change i n assessing land value has on the taxation m i l l rate i s then calculated by d i v i d i n g the 1970 gross revenue from property taxation, including the business tax, by the adjusted 1970 8 taxable property assessment.' The new 1970 m i l l rate i s then mul t i p l i e d by the adjusted assessed values of property i n the residential-business t r a n s i t i o n zone to determine the tax l i a b i l i t y under the reassessment p o l i c y . The new m i l l rate i s also mu l t i p l i e d by the t o t a l taxable assessed value of a l l r e a l estate property outside of the t r a n s i t i o n zone and the business tax assessment, to determine the tax l i a b i l i t y f o r t h i s property following reassessment. The tax burden on land and improvements both within and outside of the t r a n s i t i o n zone and the business tax assess rcent before reassessment, i s compared with the tax burden a f t e r reassessment, to determine how the burden of taxation i s s h i f t e d by assessing land value i n the t r a n s i t i o n zone according to the e x i s t i n g p o l i c y rather than the reassess-ment po l i c y . The e f f e c t s that the s h i f t s i n tax burden have on rents, property values, r e a l estate investment decisions, and development, are then evaluated by r e l a t i n g the changes i n tax burden to the theories presented i n the l i t e r a t u r e review regarding the consequences of r e a l estate tax on land and improvements. 9 C H A P T E R I FOOTNOTES 1. Ernest A. Englebert, "The P o l i t i c a l Aspects of Real Estate Taxation i n Relation to Metropolitan Growth and Planning", i n Land and Building Taxes: Their E f f e c t on  Economic Development, ed. by Arthur P. Becker (Madison W i s e : Univ e r s i t y of Wisconsin Press, 1969), p. 112. 2. Ralph Turvey, The Economics of Real Property. (London: George A l l e n and Unwin Ltd., 1957), p. 73. 3. Kenneth Back, "Land Value Taxation i n Light of Current Assessment Theory and Practice", i n The Assessment of  Land Value, ed. by Daniel M. Holland*"! (Madison Wise.": University of Wisconsin Press, 1970), p. 47? Ernest M. Fisher and Robert M. Fisher, Urban Real Estate, (New York: Henry Holt & Co., 1954), p. 457; Mason Gaffney, "Adequacy of Land as a Tax Base", i n The Assessment of  Land Values, ed. by Daniel M. Holland (Madison, Wise.: Uni v e r s i t y of Wisconsin Press, 1970), p. 172; A.N. McKay and D. W. S l a t e r , "The Scope of Urban P o l i c y " , i n Urban  Studies: A Canadian Perspective, ed. by N. H. Lithwiek and G i l l e s Paquet, (Toronto: Methuen Publications, 1968), p. 220. 4. Raleigh Barlowe, Land Resource Economics, (Englewood C l i f f s , N.J . i P r e n t i c e - H a l l , Inc., 1958), p. 558. 5. William Joseph Beeman, The Property Tax and S p a t i a l  Pattern of Growth Within Urban Areas, (Washington. D.C.J Urban Land I n s t i t u t e , 1969), p. 10. 6. Richard U. R a t c l i f f , Real Estate Analysis, (New York: McGraw H i l l Book Company, 1961), p. 10. 7. Barlowe, Land Resource Economics, p. 1; Fisher and Fisher, Urban Real Estate, p. 4; R a t c l i f f , Real Estate-Analysis, p. 10; Arthur M. Weimer and Homer Hoyt, Real Estate, (5th ed., New York: Ronald Press Company, 1966), p. 3. 10 C H A P T E R I I REAL ESTATE PROPERTY TAXES; A GENERAL DESCRIPTION Introduction The information that i s presented i n t h i s chapter i s la r g e l y the product of a review of the l i t e r a t u r e r e l a t i n g to r e a l estate property taxation. I t includes a general descrip-t i o n of r e a l estate property taxation as i t e x i s t s i n North America and a b r i e f examination of the c r i t i c i s m s that have been directed at the tax. The remaining portion of the chap-ter i s devoted to a d e t a i l e d d e s c r i p t i o n of the economic c h a r a c t e r i s t i c s of r e a l estate property taxes and the e f f e c t s that they have on rents, property values, the d i s t r i b u t i o n of wealth, r e a l estate investment decisions and urban develop-ment . The information i n t h i s chapter i s intended to serve as the t h e o r e t i c a l basis f o r evaluating the consequences of r e a l estate property taxation practices i n the r e s i d e n t i a l -business t r a n s i t i o n zone i n Regina i n the following chapters. 11 PART I 1. Real Estate Property Taxation i n North America Real estate property taxes i n North America are, as a r u l e , l e v i e d on both land and improvements. A separate assessed value i s placed on the land and the improvements, and a uniform tax, or m i l l rate, i s applied to the assessed value to c a l c u l a t e the amount of tax l i a b i l i t y . ^ " A m i l l i s equal to one-tenth of a cent. The m i l l rate i s calculated by d i v i d i n g the amount of required revenue by the assessed value of taxable property and i s expressed as m i l l s of tax per 2 thousand d o l l a r s of assessed value. The r e a l estate property tax m i l l rate t r a d i t i o n a l l y serves as a mechanism f o r balancing l o c a l government budgets i n that the rate i s set to bridge the 3 gap between expenditures and revenue from other sources. Property taxation, mainly on r e a l estate, i s the major source of revenue f o r l o c a l governments i n both Canada and the United States. Approximately f o r t y - f i v e per cent of state and l o c a l government tax revenue i s provided by property taxation 4 i n the United States. A s i m i l a r s i t u a t i o n i s found i n Canada as a whole, where, i n 1963, property tax revenue made up f o r t y -seven per cent of a l l l o c a l government expenditures.^ The importance of property taxation i n l o c a l public finances i s even more pronounced i n Regina, where, i n 1970, the revenue from r e a l estate property taxes amounted to 71.1% of the c i t y of Regina's t o t a l revenue.^ Deleting the portion of the tax that the c i t y c o l l e c t s for the public and) seperate- school 12 boards reduces the revenue from r e a l estate property taxes to only 54,3% of t o t a l expenditures, excluding public education, which i s somewhat more comparable with the national average. 2. C r i t i c i s m of Real Estate Property Taxes In spite of the f a c t that the r e a l estate property tax continues to produce a s i g n i f i c a n t proportion of l o c a l government revenues, i t i s probably the target of more c r i t i -cism than any other s i n g l e tax. C r i t i c i s m of r e a l property taxes can be divided into two groups. One source of c r i t i c i s m i s found i n the inherent c h a r a c t e r i s t i c of the tax, i n that i t i s applied to both land and improvement, and not to other factors of production or forms of wealth. The other cause of c r i t i c i s m i s the frequent lack of uniformity, both within taxation j u r i s d i c t i o n s and be-tween j u r i s d i c t i o n s i n North American c i t i e s . The l a t t e r source of c r i t i c i s m i s the subject which w i l l be extensively examined i n t h i s work. 3. Real Estate Property Taxes and Equity The two most common tests for evaluating the equity of a tax are "benefits received" and " a b i l i t y to pay".^ The "benefits received" t e s t of equity i s based on the premise that a tax i s equitable i f the tax i s l e v i e d i n proportion to the benefits received from the expenditure of the revenue. Empirical studies indicate that there i s a poor r e l a t i o n s h i p between r e a l estate property taxes and the benefits received.^ 13 Netzer points out that there i s a tendency for greater prop-ortions of property tax revenue to be spent on people-related services l i k e education, health and welfare which have l i t t l e influence on the value of property, e s p e c i a l l y the b u i l d i n g 9 part of r e a l estate. The " a b i l i t y to pay" t e s t of equity i s based on the b e l i e f that a tax i s equitable i f i t i s proportional to the wealth of the i n d i v i d u a l who pays the tax. Employing t h i s c r i t e r i a f o r equity means that r e a l estate property taxes w i l l be equitable i f the value of r e a l property r e f l e c t s the owner's t o t a l wealth. The value of r e a l estate owned i s no longer con-sidered to be a good i n d i c a t i o n of wealth, since wealth can be held i n many intangible f o r ms.^ Empirical studies i n d i c a t e that r e a l estate property taxes on r e s i d e n t i a l property are regressive because low-income groups spend a large proportion of t h e i r income f o r housing.** Studies of non-residential property taxes and income also revealed a regressive r e l a t i o n -12 ship between taxes and current income. 4. N e u t r a l i t y of Real Estate Property Taxes Real estate property taxes are frequently c r i t i c i s e d f o r f a i l i n g to meet the c r i t e r i a of economic n e u t r a l i t y . Eco-nomic n e u t r a l i t y requires that a tax not influence the decisions 13 governing the a l l o c a t i o n of resources. The r e a l estate property tax does not apply to a l l of the factors of produc-t i o n , therefore i t increases the cost of r e a l estate services r e l a t i v e to the other factors*, and a firm* desirous; of opt 1-14 mizing production e f f i c i e n c y w i l l use less r e a l estate input and substitute other factors of production such as la b o u r . 1 ^ Real estate property taxes also influence the consumption decisions of households, since the tax influences housing costs, but not food and clothing. The household attempting to optimize consumption expenditures w i l l reduce the quantity of housing purchased and increase consumption of other items, 15 i . e . c lothing and food. 5 . Taxing Building Values The p r a c t i c e of levying r e a l estate property taxes on the value of buildings has been subject to a considerable amount of c r i t i c i s m . The charges brought against taxes that are l e v i e d on buildings include increasing costs of land and buil d i n g space, encouraging the d e t e r i o r a t i o n of e x i s t i n g structures, discouraging construction of new structures, and contributing to urban sprawl. 1^ The c r i t i c s go on a step further, and conclude that taxing the value of buildings i s a contributing factor i n the creation of many of our urban problems, such as slums, i n e f f i c i e n t development patterns, r i s i n g costs of municipal services, and the shortage of housing. 6. Proposed Remedy f o r the Undesirable Aspects of Real Estate Property Taxes  A method to a l l e v i a t e the d e f i c i e n c i e s of the con-ventional r e a l estate property tax which i s frequently offered as a s o l u t i o n by c r i t i c s of the tax, i s to stop taxing buildings 15 and to assess land value at i t s f u l l market value for taxation purposes. 1^ Netzer o f f e r s one of the most comprehensive and 18 succinct evaluations of t h i s p o l i c y and i t s e f f e c t s . Basi-c a l l y , the arguments i n favour of taxing land value alone are, that such a tax i s more equitable, economically neutral, and encouraging to development of land resources to the highest and best use. The equity of taxing land value alone i s based on the premise that most of the value of land r e s u l t s from public investment rather than the owner's e f f o r t s , and taxing t h i s unearned incremental value i s more equitable than taxing ' buildings. The greater economic n e u t r a l i t y and encouragement fo r development of land to i t s highest and best use that i s a t t r i -buted to taxing land value alone r e s u l t s from the f a c t that under t h i s form of taxation the tax burden i s independent of use. No use i s given an economic advantage, and owners are encouraged to develop land to i t s highest and best use i n f order to reduce the tax l i a b i l i t y per d o l l a r of revenue or per cent of r e a l estate service. Opponents of taxing land value alone maintain that the p o l i c y would r e s u l t i n severe economic d i s l o c a t i o n s . The value of land alone i s considered to be an inadequate tax base and placing the e n t i r e tax burden on land would encourage excessive development of some land while property i n other areas would be abandoned. 16 7. Non Uniformity of Real Estate Property Taxes C r i t i c i s m of the administration of r e a l estate property taxation focuses on non uniformity of taxes both within and between taxation j u r i s d i c t i o n s . The problems associated with taxation d i f f e r e n t i a l s between taxation j u r i -d i c t i o n s , have received a considerable amount of a t t e n t i o n i n recent years and w i l l only be b r i e f l y considered here. The most recent and comprehensive examinations of the problem have concentrated on the consequences fo r the l o c a t i o n of a c t i v i t i e s due to the varying rates of r e a l estate property taxation that 19 are found i n adjacent taxation j u r i s d i c t i o n s . The general observation i s that the lack of uniformity of r e a l estate property taxes between taxation j u r i s d i c t i o n s influences the l o c a t i o n a l decisions of home owners, renters and business enterprises, r e s u l t i n g i n a sub-optimal d i s t r i b u t i o n of land 20 uses. One of the most frequently c i t e d observations i s that the r e l a t i v e l y high rates of r e a l estate property taxation i n c e n t r a l c i t i e s encourages development on the metropolitan periphery and deters renewal of the older parts of the central:; 21 c i t y . Thus, d i f f e r e n t i a l r e a l estate property taxes within urban areas are held to be contributing to the " f l i g h t to the suburbs" phenomenon as consumers of housing and business enter-prise s attempt to escape high taxation l e v e l s , leaving central c i t i e s to continue on the downward f i n a n c i a l s p i r a l of r i s i n g costs and eroding tax bases. 17 8. Non-uniform Real Estate Property Taxation Within Taxation J u r i s d i c t i o n s  The administration of r e a l estate property taxes i n North America i s frequently c r i t i c i z e d f o r a lack of u n i f o r -mity within taxation j u r i s d i c t i o n s . Netzer provides one of the most det a i l e d and comprehensive analyses of the problem of non-uniformity, including the causes of the problem and the 22 consequences. He i d e n t i f i e s two d i f f e r e n t types of non-uniform taxation. One v a r i e t y i s when s i m i l a r properties, such as single family houses are assessed at d i f f e r e n t assess-23 ment r a t i o s within the same taxation j u r i s d i c t i o n . The other kind of non-uniformity occurs when d i f f e r e n t types of property, such as apartment buildings and s i n g l e family houses are assessed at d i f f e r e n t assessment r a t i o s within the same taxation j u r i s d i c t i o n . 9. Causes of Non-uniform Taxation Non-uniform taxation within tax j u r i s d i c t i o n s due to va r i a t i o n s i n assessment r a t i o s can be at t r i b u t e d to many d i f f e r e n t f a c t o r s . Non-uniform taxation can occur when the owners of c e r t a i n types of property, or the owners of property i n a p a r t i c u l a r area of the tax j u r i s d i c t i o n , launch an e f f e c -t i v e appeal against the assessed value that the assessor places on t h e i r property and succeed i n having i t revised by a tax-a t i o n appeal board while other property owners accept the assessment of t h e i r property without protest.24 This type of acti o n frequently r e s u l t s i n r e l a t i v e under assessment of 1 8 property i n old d e t e r i o r a t i n g areas where property owners use the decline of the area as an argument for reducing assessment rates. Non-uniform taxation may also be the r e s u l t of a consc-ious e f f o r t on the part of p o l i t i c i a n s or administrators to under assess c e r t a i n types of property for purposes of tax-a t i o n to avoid opposition through tax appeals, or the b a l l o t box, from p a r t i c u l a r l y m i l i t a n t groups of taxpayers who are 25 s e n s i t i v e to tax rates* The owners of sing l e family dwelling un i t s are frequently the b e n e f i c i a r i e s of t h i s assessment pr a c t i c e since they see the tax on t h e i r property as a d i r e c t housing cost, whereas the owners of commercial and apartment properties are able to pass on part or a l l of any tax increase to tenants or customers by r a i s i n g rents or prices and are therefore less l i k e l y to oppose tax increases. Non-uniform taxation may also be the r e s u l t of attempts to d i s t r i b u t e the burden of taxation i n a c l o s e r r e l a t i o n s h i p 27 to the benefits received. The expenditure of revenue from r e a l estate property taxes for s o c i a l programmes such as re-creation, education and welfare aid tend to produce benefits that are more d i r e c t l y r e l a t e d to i n d i v i d u a l s than r e a l pro-perty. The market value per resident of apartment buildings tends to be lower than other forms of housing so that, i f r e s i d e n t i a l property of a l l types i s assessed at a uniform proportion of market value, r e a l estate taxes on apartments y i e l d less revenue per resident than other types of housing. 19 In order to equalize tax revenue per capita, apartment buildings are assessed at a higher proportion of market value than other forms of housing which r e s u l t s i n non-uniform taxation i n terms of the tax as a percentage of market value. The q u a l i t y and quantity of the s t a f f responsible for assessing r e a l estate property can be a s i g n i f i c a n t factor i n the under or over assessment of c e r t a i n groups or types of 28 property. Manpower d e f i c i e n c i e s i n terms of numbers or a b i l i t y does not usually prevent sing l e family houses from being uniformly assessed because they are r e l a t i v e l y simple to evaluate, but non-uniformity of assessments can frequently occur among other types of property or between single family houses and the other types of property. The a v a i l a b i l i t y of property sales data i s an impor-tant p r e r e q u i s i t e f o r es t a b l i s h i n g and maintaining the u n i -29 formity of r e a l estate taxation. In new si n g l e family r e s i d e n t i a l areas there are usually a large number of recent sales and the properties are s u f f i c i e n t l y s i m i l a r so that i t i s r e l a t i v e l y easy to produce uniform assessments within the area. Property i n older areas however, exhibits a greater de-gree of d i v e r s i t y , and property sales are much less frequent so that i t i s much more d i f f i c u l t to produce uniform assess-ments i n old areas than new single family areas. Municipal assessors tend to use the present use of the s i t e as the basis f o r estimating land value when property 30 sales information i s inadequate. This p r a c t i c e u s u a l l y 20 r e s u l t s i n under assessing land that i s under u t i l i z e d . I t i s es p e c i a l l y apparent i n t r a n s i t i o n a l zones and old single family r e s i d e n t i a l areas that are changing to apartment or commercial uses, or where a g r i c u l t u r a l uses are givi n g way to urban 31 functions. Under assessment of land i n t r a n s i t i o n a l areas may also r e s u l t from infrequent reassessments since the value of land i n such areas tends to appreciate r e l a t i v e to land i n 32 the r e s t of the tax j u r i s d i c t i o n . 10. The Basis f o r C r i t i c i z i n g Non-uniform Real Estate Taxation Within a Tax J u r i s d i c t i o n  The most frequently given reasons f o r c r i t i c i z i n g non-uniform r e a l estate taxation are that i t r e s u l t s i n an inequit-able d i s t r i b u t i o n of the burden of taxation and i t causes re-sources to be misallocated. The charge that non-uniform r e a l estate taxes are inequitable i s v a l i d i f the tax i s considered to be equitable when i t i s proportional to the value of the taxed property, but when other d e f i n i t i o n s of equity are used, uniformity of taxation may increase or decrease the equity of the tax. The commonly accepted standards for evaluating the equity of a tax are "benefits received" and " a b i l i t y to pay." The "benefits received" t e s t of equity requires that a tax be le v i e d i n proportion to the benefits received from the expend-i t u r e of the tax revenue. The equity of a uniform r e a l estate property tax therefore rests on whether or not the person who pays the tax, benefits from the tax-financed expenditures i n 21 proportion to the value of the taxed property. Research on t h i s subject has f a i l e d to e s t a b l i s h a very impressive cor-r e l a t i o n between r e a l estate property values and the benefits received from the expenditure of r e a l estate property tax 34 revenue. Taxes on land however, are deemed by some writers to be more equitable i n terms of benefits received than taxes on improvements because part of the land value i s a r e s u l t of pub l i c expenditures f o r pu b l i c services, while the value of 35 the improvements i s not. C r i t i c i s m of non-uniform r e a l estate taxation as being inequitable, r e l a t i v e to uniform tax-a t i o n on the basis of the "benefits received" t e s t therefore appears to be somewhat l e s s than conclusive, since a uniform r e a l estate tax i s not nece s s a r i l y equitable. The " a b i l i t y to pay" t e s t of equity i s based on the premise that a tax i s equitable i f i t i s proportional to the wealth of the e n t i t y that pays the tax. A uniform r e a l estate property tax therefore, only meets the " a b i l i t y to pay" t e s t of equity i f the value of r e a l estate held by i n d i v i d u a l s and corporate e n t i t i e s r e f l e c t s t h e i r t o t a l wealth. The premise that the value of r e a l estate holdings i s i n d i c a t i v e of the holder's wealth i s no longer considered v a l i d since wealth may be held i n intangible forms such as stocks and bonds. A uniform r e a l estate property tax i s therefore not nece s s a r i l y equitable according to the " a b i l i t y to pay" t e s t of equity, nor i s a non-uniform tax more inequitable.36 The conclusion i n the preceding 3" sentence i s supported by empirical evidence i n several studies. 22 The c r i t i c i s m , that non-uniform r e a l estate taxation causes resources to be a l l o c a t e d i n a manner that r e s u l t s i n a less than optimum l e v e l of public welfare, i s based on the assumption that a uniform tax on r e a l estate i s economically neutral and has no detrimental e f f e c t on the a l l o c a t i o n of resources. This assumption i s i n turn based on a pure com-p e t i t i o n model of the r e a l estate market which a l l o c a t e s re-sources i n a manner that r e s u l t s i n the optimum l e v e l of public welfare. In actual f a c t the l o c a l r e a l estate market i s more frequently f a r from p e r f e c t , and the p o s s i b i l i t y of an op-timum a l l o c a t i o n of resources occurring under conditions of a 3 uniformly l e v i e d r e a l estate tax would be purely c o i n c i d e n t a l . The operation of the r e a l estate market i s influenced by such diverse factors as zoning by-laws, public expenditures, num-erous taxes, i n t e r e s t rates, technology and s o c i a l change. The imperfections i n the r e a l estate market are such that a u n i -formly l e v i e d r e a l estate tax may, or may not, a l l o c a t e re-sources so as to optimize public welfare, and a non-uniform r e a l estate tax may e i t h e r improve or worsen the a l l o c a t i o n 39 of resources. The information i n the preceding paragraphs indicates that there i s l i t t l e empirical or t h e o r e t i c a l evidence to sup-port the thesis that uniform r e a l estate property taxation i s more equitable and produces a better a l l o c a t i o n of resources than non-uniform r e a l estate taxation. 23 PART I I The Economic Nature and Consequences of Real Estate Property Taxes Although the l i t e r a t u r e i n the f i e l d of r e a l estate property taxation does not provide a v a l i d t h e o r e t i c a l method-ology for evaluating the e f f e c t s of non-uniform r e a l estate property taxation, per se, i t does provide an abundance of information on the theory of how taxes on land and improve-ments a f f e c t property values, rents, r e a l estate investment decisions and development. A b r i e f d e s c r i p t i o n of t h i s i n f o r -mation i s presented i n t h i s chapter, and w i l l be employed i n following chapters, as a methodology for evaluating the con-sequences of an instance of non-uniform r e a l estate property taxation. 1. The Economic D i s t i n c t i o n Between Land and Improvements Some analysts t r e a t taxes on land and improvements as one tax f o r the purposes of evaluating the e f f e c t s of r e a l estate property taxes. The p r a c t i c e of d i f f e r e n t i a t i n g be-tween taxes on land and improvements however, i s becoming more widely accepted, e s p e c i a l l y by the advocates of the p r i n c i p l e of taxing land value only, and exempting improve-40 ments. The basis f o r drawing the d i s t i n c t i o n between taxes on land and taxes on improvements i s the very d i f f e r e n t eco-nomic c h a r a c t e r i s t i c s that these tvro components of r e a l estate possess. Land i s generally considered by economists 24 as a " g i f t of nature" that requires no human e f f o r t to bring i t i n t o existence. I t i s fix e d i n terms of supply and l o c a t i o n and has no cost.^* The supply of land i s not l i m i t e d i n ab-solute terms, since i t i s possible i n a sense, to increase i t through the use of c a p i t a l and labour by such means as dredging the bottoms of water bodies to create islands, but t h i s i s more a matter of converting land from one use to another 42 rather than a c t u a l l y expanding the aggregate supply. Land i s a l so considered, under normal circumstances, to be indestruc-t i b l e from neglect or misuse, although i t s p r o d u c t i v i t y f o r a p a r t i c u l a r use such as a g r i c u l t u r e , can be impaired or even destroyed. The aggregate supply of land therefore cannot be 43 diminished. The supply of land does not expand or contract i n response to changes i n economic considerations i n the form of rents or p r i c e s . The improvement component of r e a l estate however i s a c a p i t a l good and as such i s the product of past human effort.*^ The supply of improvements i s not f i x e d . I t can be expanded by applying labour to raw materials, and a l t e r n a t i v e l y , the supply can be diminished by using labour to destroy i t , or by neglecting r e p a i r s and maintenance to compensate fo r d e t e r i o r -ation. Improvements have a cost associated with t h e i r produc-t i o n and existence, and the supply expands and contracts i n response to changes i n rents and prices. 2. Taxes on Land and Improvements A tax on land has d i f f e r e n t consequences than a tax 25 on improvements because of the d i s t i n c t i v e economic charact-45 e r i s t i c s that these two components possess. 3. The E f f e c t of Real Estate Property Taxes on Rents and Prices  A tax on the value of improvements reduces the net value of the stream of benefit from the property and the p r o f i t -46 a b i l i t y of the investment. Investment i n improvements i s discouraged, fewer new improvements are produced, and e x i s t i n g ones are allowed to deteriorate. Over a period of time the supply of improvements declines r e l a t i v e to demand and rents begin to r i s e . In the case of commercial properties, the i n -crease i n rents w i l l cause the volume of the goods and services that are produced by investment i n these assets to decline and prices w i l l increase. Rents and prices w i l l increase u n t i l a new l e v e l of equilibrium i s established where the supply of improvements i s equal to the demand. The length of time re-quired for an increase i n the tax on improvements to increase rents and prices to a new equilibrium l e v e l , i s dependant upon the d u r a b i l i t y of e x i s t i n g improvements, the strength of de-mand, and the responsiveness of production to p r o f i t expect-47 ations. A tax on the value of land, excluding the value added by the a p p l i c a t i o n of private c a p i t a l , a l so reduces the net value of the stream of benefit from the property and the p r o f i t a b i l i t y of the investment. 4 8 The supply of land however, i s f i x e d and does not decline i n response to a decrease i n 26 p r o f i t expectations, so that rents and prices of services do 49 not r i s e as a r e s u l t of imposing a tax on the value of land. 4. The E f f e c t of Real Estate Property Taxes on Property Values At the time a tax i s imposed on the value of improve-ments , i t reduces the net value of benefits received by the owner. The reduction i n net benefits received probably causes the value of the property to decline i n the short run, but as rents and prices increase i n response to a decrease i n the supply of improvements the net value of benefit received i s restored. In the long run, a tax on the value of improve-51 ments has l i t t l e i f any e f f e c t on property value. The net value of the stream of benefits that a property owner receives i s immediately decreased by the amount of the tax, wlhen a tax i s l e v i e d on the value of the land. Property rents and the prices of services cannot be increased to compen-sate f o r the increase i n the tax on land, because the supply of land i s f i x e d . The decrease i n the net value of benefits received therefore continues for the duration of the tax levy and i s c a p i t a l i z e d . The value of the land decreases i n propor-52 t i o n to the amount of the tax. 5. Who Bears the Burden of Real Estate Property Taxes? A tax on property that does not reduce the supply of the property and cause rents and prices to increase cannot 53 be s h i f t e d . I t remains a burden on the taxed property and i s borne i n the form of a c a p i t a l loss by the owner of the 2 7 property. Taxes on land value are therefore borne by the ' owner of the property. c On the other hand, a tax on the value of improvements that causes the supply of improvements to decrease r e l a t i v e to demand and rai s e s rents and pr i c e s , i s s h i f t e d to the f i n a l consumer of the goods and services that are produced with the taxed p r o p e r t y . 5 4 A time l a g may e x i s t between the imposition of the tax on the value of improvements, and when prices and rents have r i s e n s u f f i c i e n t l y to s h i f t the tax to tenants and consumer. The owner of the property may bear the burden of the tax for a time, but i n the long run i t i s borne by tenants and consumers. Taxes on both land value and the value of improvements are considered to be non s h i f t a b l e on owner-occupied residences and are borne by the owner."*"* As the owner of the property, he bears the tax on the land as a c a p i t a l loss and as a con-sumer of housing, he bears the burden of the tax on the improve-ments . 6. Real Estate Property Taxes, Investment Decisions and Urban Development Urban development i s to a large extent the product of a multitude of private investment decisions that are made on the basis of the p r o f i t motive. I t i s generally accepted by economists, that r e a l estate property taxes influence urban development through t h e i r impact on the p r o f i t a b i l i t y of r e a l estate investments, and on decisions concerning the use of 2 8 r e a l estate resources. The e f f e c t of r e a l estate property taxes on investment decisions and urban development has not been examined comprehen-s i v e l y by means of empirical studies. A considerable amount of time and e f f o r t however, has been devoted to the analysis of r e a l estate property taxes and t h e i r e f f e c t s on urban develop-ment, employing accepted economic theories as a n a l y t i c a l t o o l s . The remaining portion of t h i s chapter consists of a b r i e f de-s c r i p t i o n of the observations and conclusions that have emana-ted from the t h e o r e t i c a l a n a l y s i s . 7. Real Estate Property Taxes and Speculation A speculative r e a l estate investment i s one i n which the investor seeks a w i n d f a l l c a p i t a l gain due to appreciation of property values, rather than an annual return on the invest-ment i n the form of income from rents, or s e r v i c e s i n the case of owner occupied property. A speculator acquires an i n t e r e s t i n r e a l estate property expecting that i t can be disposed of at some time i n the future at a price that exceeds the a c q u i s i -t i o n cost, plus the cost of holding the i n t e r e s t . Speculative r e a l estate investments i n urban areas are more frequently associated with vacant land or land that i s underdeveloped. Speculation i n r e a l estate property i s c r i t i c i z e d f o r i t s e f f e c t s on the development pattern of urban centres as well as degeneration of p a r t i c u l a r areas within them. Speculation r e s u l t s i n vacant or u n d e r - u t i l i z e d s i t e s interspersed with other properties that are developed to t h e i r market p o t e n t i a l . Development i s forced to spread beyond the areas that would be required i f a l l properties were developed to t h e i r f u l l p o t e n t a i l . The cost of providing municipal services i s increased as are transportation costs and t r a v e l times which r e s u l t s i n a les s e f f i c i e n t urban form. A tax on land value discourages speculative r e a l estate 57 investments. The tax i s c a p i t a l i z e d into the value of land and i s borne by the owner of the property. This increases the cost of holding r e a l estate and reduces the p r o f i t expectations of possible future gains. I t becomes advantageous to invest i n some properties on the basis of e x i s t i n g use p o t e n t i a l rather than speculation, and les s property i s held for speculation than would be the case i f land value was not taxed. A tax on the value of buildings or other improvements however, tends to encourage speculation. A tax l e v i e d on the value of improvements does not increase the cost of holding unimproved land or improved land. In the case of unimproved land, the magnitude of tax l i a b i l i t y i s unaffected by a tax on the value of improvements, while i n the case of improved land, the tax i s passed on to tenants i n the form of rent and p r i c e 58 increases without decreasing net revenue. Imposition of a tax on the value of the improvements portion of r e a l estate reduces the investment value of a l l r e a l property f o r purposes 59 that e n t a i l improvements r e l a t i v e to those that do not. Marginal developments become uneconomical and more property i s held i n an undeveloped or underdeveloped state f o r speculative 30 investments. 8. Real Estate Property Taxes and the Intensity of Land Use Urban land can be used for a v a r i e t y of purposes at various densities and the range of c a p i t a l improvements can vary from zero f o r a vacant s i t e used as an unpaved parking l o t , to a m u l t i - m i l l i o n d o l l a r h i g h - r i s e apartment or o f f i c e b u i l d i n g . ^ A tax that i s l e v i e d on the value of land, and a tax that i s l e v i e d on the value of improvements, influences the l e v e l of development and i n t e n s i t y of use of urban land i n d i f f e r e n t ways. A tax that i s l e v i e d on the c a p i t a l value of land i s a f i x e d cost that i s constant i r r e s p e c t i v e of the l e v e l of use of the property. The burden of the tax per u n i t of output decreases with each successive u n i t of a d d i t i o n a l output, 36 that property owners are encouraged to develop and use urban land at i t s highest and best use. An i l l u s t r a t i v e example of t h i s p r i n c i p l e i s presented below fo r the sake of c l a r i -f i c a t i o n . Assume that a tax i s l e v i e d on a parcel of urban land amounting to $100. I f a ten-suite apartment b u i l d i n g i s erected on the property, the tax i s $10 per s u i t e , whereas i f ten a d d i t i o n a l suites are added, the tax decreases to $5 per suite. Assuming that there are no dis-economies of scale, and gross income per s u i t e does not decline, i t w i l l be more p r o f i t a b l e to erect a 20-suite apartment b u i l d i n g than one with only ten s u i t e s , due to the diminishing e f f e c t of the 31 tax. The p r o f i t a b i l i t y of the property w i l l increase with each a d d i t i o n a l suite u n t i l dis-economies of scale, or de-creases i n gross revenue cancel out the benefits of spreading the land tax over an a d d i t i o n a l s u i t e . The tax on land also increases the costs associated with the use of land r e l a t i v e to c a p i t a l improvements and encourages c a p i t a l improvements to be substituted f o r land. An example of t h i s i s when a two-story b u i l d i n g i s erected on a small s i t e as an a l t e r n a t i v e to a si n g l e - s t o r y structure on a l a r g e r s i t e . Imposing a tax on the value of land encourages the most productive and valuable land to be developed and used at higher i n t e n s i t i e s , r e s u l t i n g i n a more compact urban develop-ment pattern, with a greater concentration of a c t i v i t i e s and larger, better q u a l i t y structures. A tax on the value of„improvements however, tends to ft") discourage development of land to i t s highest and best use. I t reduces the p r o f i t a b i l i t y of a l l land uses that involve taxable improvements, and makes some marginal developments and uses uneconomical. The number of p r o f i t a b l e development opportunities i s reduced and aggregate c a p i t a l investment i n r e a l property improvements declines. The tax also makes marginal increments to buildings i n terms of height, bulk, and q u a l i t y unprofitable, so that buildings tend to be smaller and of lower q u a l i t y . A tax on the value of improvements increases the cost of employing c a p i t a l r e l a t i v e to land, and 32 f o r some purposes such as h o using, l a n d i s s u b s t i t u t e d f o r b u i l d i n g space as a s m a l l house on a l a r g e l o t becomes r e l a t i v e l y more d e s i r a b l e than a l a r g e house on a s m a l l l o t . C a p i t a l i n t e n s i v e developments a r e d i s c o u r a g e d r e l a t i v e t o l a n d i n t e n s i v e developments, and the r a t i o o f improvements to land d ecreases. In summation, imposing a tax on the v a l u e o f improvements decreases the aggregate supply o f improvements i n both q u a n t i t y and q u a l i t y , decreases the i n t e n s i t y o f l a n d use, spreads urban development over a l a r g e r a r e a , and i n c r e a s e s the amount of l a n d u t i l i z e d f o r urban purposes. 9 . Real E s t a t e P r o p e r t y Taxes and Urban Renewal Real e s t a t e p r o p e r t y taxes a l s o a f f e c t urban renewal d e c i s i o n s t h a t i n f l u e n c e the economic and p h y s i c a l s t a t e o f e x i s t i n g s t r u c t u r e s . A tax on the v a l u e o f l a n d tends t o promote a h i g h economic and p h y s i c a l standard o f s t r u c t u r e s w h i l e a tax on the v a l u e o f improvements tends to have a neg-a t i v e e f f e c t . The income producing c a p a c i t y o f urban r e a l e s t a t e tends to d e c l i n e as the improvements d e t e r i o r a t e . I f p h y s i c a l d e t e r i o r a t i o n i s p e r m i t t e d to go unchecked, a t some p o i n t the r e a l e s t a t e becomes u n p r o f i t a b l e to operate and must be r e -newed, r e p l a c e d , demolished, or abandoned. A tax on the v a l u e o f l a n d i s a f i x e d c o s t t h a t does not d ecrease as improvements d e t e r i o r a t e so t h a t the tax i n c r e a s e s as a percentage o f gross revenue. R e a l e s t a t e becomes u n p r o f i t a b l e a t an e a r l i e r stage 33 of the detericr r a t i o n of the improvement, and encourages rehab-i l i t a t i o n or replacement. A tax on the value of land does not increase when expenditures are made to maintain or renew de-64 t e r i o r a t i n g structures. This means that property owners are able to r e t a i n a l l of the benefits i n terms of increased revenue or services that r e s u l t from expenditures f o r main-tenance or renewal, and such expenditures are not discouraged.^ A tax on the value of improvements increases the annual cost of marginal improvements to a l e v e l i n excess of revenue, so that they w i l l not be maintained, nenewed or r e -placed. The aggregate supply of improvements declines i n terms of quantity and q u a l i t y u n t i l the rents f o r the non marginal improvements r i s e s u f f i c i e n t l y to reimburse the owners f o r the tax on the value of the improvements. A l l improvements w i l l be allowed to deteriorate to a greater extent before expend-i t u r e s f o r maintenance or renewal are undertaken when a tax i s imposed on the value of improvements.^^ In summary, a tax on the value of land encourages the maintenance, renewal and replacement of ageing or deteriorated structures while a tax on the value of improvements has the opposite e f f e c t and discourages expenditures f o r maintenance, renewal and replacement of e x i s t i n g structures. Taxes on im-provements are considered to be a contributing f a c t o r i n the generation of urban b l i g h t , decay and slums while taxes on land are considered to retard these symptoms. 34 C H A P T E R II FOOTNOTES 1. Grant K. Crawford, Canadian Municipal Government (Toronto: University of Toronto Press), p. 213. 2. Ibid., p. 214. 3. Ibid., p. 211. 4. Beeman, The Property Tax, p. 14. 5. Economic Council of Canada, Fourth Annual Review, The Canadian Economy From the I960's to the 1970's (Ottawa: The Queen's Pr i n t e r , 1967), p. 219. 6. C i t y of Regina, Comptroller's Department, C i t y of Regina  Fi n a n c i a l Statement for the Year Ending December 31, 1970, (Regina, Saskatchewan, 1971) p. 42. 7. Barlowe, Land Resource Economics, p. 558; Mary Rawson, Property Taxation and Urban Development (Washington, D.C.: Urban Land I n s t i t u t e , 1961;, p. 29. 8. D. Netzer, Economics of the Property Tax, (Washington, D.C.: Brookings I n s t i t u t e , 1966), p. 5:M.D. Inman, Economics  i n a Canadian Setting,(Toronto: Copp Clark Publishing Co. Ltd. 1959), p. 330. 9. Netzer, Economics of the Property Tax, p. 67. 10. Inman, Economics, p. 330. 11. D. Netzer, Economics and Urban Problems, (New York: Basic Books, Inc., 1970), p. 67. 12. Netzer, Economics of the Property Tax, p. 40. 13. 3eeman, The Property Tax, p. 19. 14. Netzer, Economics and Urban Problems, p. 71. 15. Ibid., p. 68. 16. Beeman, The Property Tax. 17. Arthur P.Becker, ed., Land and Building Taxes: Their  E f f e c t on Economic Development, (Madison, Wisconsin: University of Wisconsin Press, 1969)j Daniel M. Holland, ed. , The Assessment of Land Value, (Madison, W i s e : University of Wisconsin Press, 1970); Walter Morton, Housing Taxation, (Madison, W i s e : Unive r s i t y of Wisonsin Press, 1955). 35 18. Netzer, Economics and Urban Problems, pp. 190 - 97. 19. Netzer, Economics of the Property Tax; Beeman, The Property  Tax. 20. Netzer, Economics of the Property Tax, p. 110. 21. I b i d . , p. 75. 22. I b i d . , pp. 165 - 79. 0 0 . ^ _ assessed value 23. Assessment r a t i o = — - - - ^ - . - ^ - g -24. Mason Gaffrey, "Adequacy of Land as a Tax Base", The  Assessment of Land Value, ed. by Daniel M. Hollard.f (Madison, W i s e ; Un i v e r s i t y of Wisconsin Press, 1970), p. 172. 25. Fisher and Fisher, Urban Real Estate, p. 457. 26. Netzer, Economics of the Property Tax, p. 81. 27. Ib i d . , p. 82. 28. Fisher and Fisher, Urban Real Estate, p. 458. 29. Netzer, Economics of the Property Tax, p. 79. 30. Gaffrey, "Adequacy of Land as a Tax Base", p. 185. 31. A.M. Woodruff, "Assessment Standards? Highest and Best Use as a Basis f o r Land Appraisal and Assessment", i n The Property Tax and Its Administration, ed. by Arthur D. Lynn, Jr. (Madison, Wise.: University of Wisconsin Press, 1969), p. 182. 32. Weimer and Hoyt, Real Estate, p. 196. 33. Rawson, Property Taxation and Urban Development, p. 29. 34. Beeman, The Property Tax, p. 14. 35. Rawson, Property Taxation and Urban Development, p. 30. 36. Inman, Economics, p. 330. 37. Morton, Housing Taxation, p. 176. 38. Beeman, The Property Tax, p. 20 39. Richard A. Musgrave, The Theory of Public Finance, (New York: McGraw-Hill Book Company, 1959), p. 143. 36 40. Netzer, Economics and Urban Problems; Rawson, Property  Taxation and Urban Development, Turvey, Economics of Real  Property. 41. Inman, Economics, p. 116. 42. Ibid. 43. Becker, Land and Building Taxes, p. 14. 44. Ibid, p. 17. 45. Edwin Seligman, The S h i f t i n g and Incidence of Taxation, 4th ed. (New York! Columbia Univ e r s i t y Press, 1921), p. 288. 46. Netzer, Economics of the Property Tax, p. 36. 47. I b i d . , p. 33. 48. Ibid., p. 33. 49. Becker, Land and Building Taxes, p. 17. 50. Barlowe, Land Resource Economics, p. 541. 51. Becker, Land and Building Taxes, p. 20. 52. Barlowe, Land Resource Economics, p. 543. 53. Ibid., p. 541. 54. Becker, Land and Building Taxes, p. 17. 55. Netzer, Economics of the Property Tax, p. 36. 56. Rawson, Property Taxation and Urban Development, pp. 27 - 28. 57. Turvey, The Economics of Real Property, p. 91V ;Frederick D. Stocker, "Effects of Taxation on Urban Land Use", Appraisal Journal, XXXlX (January, 1971), p. 66. 58. Barlowe, Land Resource Economics, p. 542. 59. Mason Gaffrey, "Land Planning and the Property Tax", Journal of the American I n s t i t u t e of Planners, XXXV (May 1969), P. 179. 60. Arthur P.Becker, " P r i n c i p l e s of Taxing Land and Buildings f o r Economic Development", i n Land and Building Taxes:  Their E f f e c t on Economic Development, ed. by Arthur P. Becker, (Madison W i s e : Univ e r s i t y of Wisconsin Press, 1969), p. 22. 37 61. Ibid; Netzer, Economics and Urban Problems, p. 197; Turvey, Economics of Real Property, p. 88. 62. Gaffrey, "Adequacy of Land as a Tax Base," p. 192. 63. Ibid. 64. Becker, " P r i n c i p l e s of Taxing Land and Buildings", p. 26; Gaffrey, "Adequacy of Land as a Tax Base", p. 193. 65. Turvey, The Economics of Real Property, p. 92. 66. Becker, " P r i n c i p l e s of Taxing Land and Buildings"; p. 22. 67. James Heilbrum, "Reforming the Real Estate Tax to Encourage Housing Maintenance and R e h a b i l i t a t i o n " , i n Land and Building  Taxes: Their E f f e c t on Economic Development, ed. by Arthur P.Becker, (Madison, Wise.: University of Wisconsin Press, 1969), p. 71. 38 C H A P T E R III REAL ESTATE PROPERTY TAXATION IN REGINA;  POLICY AND PRACTICE 1. The P o l i c y Real estate property taxation i n Regina i s administered by the c i t y council and t h e i r appointed o f f i c i a l s under the pro-v i s i o n s o f p r o v i n c i a l l e g i s l a t i o n . * The p r o v i n c i a l l e g i s l a t i o n s p e c i f i e s that a uniform tax rate s h a l l be applied to the 2 assessed value of a l l non-exempt r e a l estate. This condition i s met i n practice so that any lack of uniformity i n taxation must be the r e s u l t of non-uniform assessment practices. The primary objective of the p r o v i n c i a l l e g i s l a t i o n 3 i s equity, but the basis of assessment i s not c l e a r l y defined. Land i s to be assessed at i t s " f a i r value" while improvements s h a l l not be assessed at more than 60% of " f a i r value". The term " f a i r value" i s not defined i n terms of objective c r i t e r i a such as market value or r e n t a l value, so that there i s no speci-f i e d basis for evaluating the uniformity of assessment. For the purpose of t h i s study, assessed values expressed as a percentage of market value or sale p r i c e , w i l l be used as a basis f o r evaluating the uniformity of assessment. Market value or s e l l i n g p r i c e i s not a p e r f e c t indicator of value since they w i l l only be i d e n t i c a l under conditions of perfect cora-p e t i t i o n . I n s p i t e o f t h e aforesaid d e f i c i e n c y of market value o r s e l l i n g p r i c e , i t i s probably a more r e l i a b l e estimate 39 of value than those arrived at by such mathematical methods as the land r e s i d u a l method, which tend to produce d i f f e r e n t values under d i f f e r e n t conditions.^ The p o l i c y which guides r e a l estate property assess-ment i n Regina i s not c l e a r l y enunciated; t h i s i s e s p e c i a l l y true for the assessment of land. An information sheet which i s d i s t r i b u t e d by the C i t y of Regina, C i t y Assessor's Depart-ment, states that buildings are assessed on the basis of 45% of the 1946 replacement cost and depreciated according to i n -d i v i d u a l property circumstances.^ This provides a r e l a t i v e l y objective c r i t e r i a on which to base the assessment of buildings, since building costs from the past are r e a d i l y a v a i l a b l e . The information sheet goes on to state that land i s assessed at " f a i r equitable value", which i s intended to be a f a i r value i n comparison with other properties i n Regina. The assessed value acording to the sheet, tends to be approximately 60 - 65% of market value, although admittedly, market value i s not used as the basis of assessment.^ The C i t y of Regina lev i e s a business tax which i s , i n r e a l i t y , a s p e c i a l tax on improvements. Business premises are assessed at a s p e c i f i e d rate per square foot of occupied f l o o r space. The assessment rate varies according to the type of business. The same m i l l r a t e that i s applied to the assessed value of r e a l estate property i s also applied to the business assessment. The business tax however, i s l e v i e d against the business rather than the owner of the property. The business 40 tax i s mentioned here to explain why i t i s included as part of the tax base i n Chapter IV. 2. The Study Area The residential-business t r a n s i t i o n zone, which i s the p r i n c i p a l area of concern of t h i s study, encompasses approx-imately twenty f i v e c i t y blocks immediately adjacent to the Regina central business d i s t r i c t as shown on Figure 1. Land use information f o r the t r a n s i t i o n zone i s summarized i n Table I . 8 TABLE Ti . Land Use In The Residential-Business T r a n s i t i o n Zone Land Use Category Apartments - Walk-up 513,853 15.4 Apartments - High-rise 135,885 4.1 Other Residential 1,769,148 52.8 Commercial 148,488 4.4 Vacant Land 205,826 6.0 Government 23,125 0.7 Public Service** 550.625 16.6 Tot a l 3,346,950 100.0 * Roads, sidewalks and lanes are excluded. **Public Service includes churches, schools and the YMCA Most of the land, excluding streets and lanes, i n the residential-business t r a n s i t i o n zone, i s used f o r r e s i d e n t i a l purposes. Walk-up apartment s i t e s account f o r 15.4% of the land, while h i g h - r i s e apartment s i t e s make up an a d d i t i o n a l 4.1%. Other r e s i d e n t i a l uses, which includes s i n g l e family dwellings, boarding houses, rooming houses or houses which have Net Area* Square Feet % 41 V 42 been converted to produce two or more suites, occupy 52.8% of the t o t a l developable land i n the area. Residential uses of a l l types occupy 72.3% of the a v a i l a b l e land. Public service constitutes the next most important land use with 16.6% of the a v a i l a b l e land followed by vacant, 6.0%, Commercial 4.4% and Government with 0.7%. The C i t y of Regina Zoning By-law permits a wide var-i e t y of uses i n the residential-business t r a n s i t i o n zone. Apartments, boarding houses, rooming houses and hotels are per-mitted i n the area as r e s i d e n t i a l uses, but s i n g l e family 9 dwelling units are classed as l e g a l non-conforming uses, A v a r i e t y of commercial uses are also permitted i n the zone i n -cluding banks, c r e d i t unions, finance and loan o f f i c e s , r e a l estate o f f i c e s and insurance o f f i c e s . The development i n the study area i s r e l a t i v e l y mature with 68.7% of the structures b u i l t p r i o r to 1921, an a d d i t i o n a l 17.6% b u i l t between 1921 and 1940 and only 13.7% b u i l t since 1940. 1 0 In summary, the study area i s characterized by pre-dominately r e s i d e n t i a l structures of r e l a t i v e l y mature age, that are slowly being replaced by modern apartment buildings and o f f i c e buildings. 3. The Practice of Assessing Land Value f o r Taxation i n the Study Area  The actual assessment of land value f o r r e a l estate taxation purposes i n the residential-business t r a n s i t i o n zone 43 i s r e l a t i v e l y complex since a number of d i f f e r e n t rates are used. The taxation rates that are used i n t h i s study are taken from the 1970 tax r o l l , and have been i n e f f e c t since a general re-assessment of land values i n the area was under-taken i n 1968. The highest land taxation rates i n the r e s i d e n t i a l -business t r a n s i t i o n zone are found on property that i s used for commercial purposes. Land, that i s used f o r e x c l u s i v e l y commercial purposes, i s assessed at a uniform rate of $200 per front foot for l o t s having a depth of 125 feet, regardless of t h e i r l o c a t i o n within the study area. Lots that are used f o r both r e s i d e n t i a l and commercial purposes are assessed at lower rates. The combined residential-commercial l o t s are assessed at rates which vary between $88 and $193 per front foot, de-pending upon the extent of the commercial use. The mean assessed rate f o r land that i s used for commercial purposes exc l u s i v e l y , and land that i s used f o r both r e s i d e n t i a l and commercial purposes, i s $193 per front foot. See Table IX. TABLE II 1970 Assessed Land Values In The Residential-Business T r a n s i t i o n Zone Land Use Category Assessed Mean Assessed Value per Front Foot ($) Value ($) Vacant Land Commercial Apartments 1,322 1,164 5,183 14,116 $ 172,940 225,470 522,650 918,250 $ 130 193' 100 65 Other Residential Total 21,785 1,839,310 84 44 * The mean assessed value i s lower then the standard assessment rate of $200.00 per front foot because properties that have both commercial and r e s i d e n t i a l uses are assessed at a lower rate. Land that i s used for purposes other than commercial functions i s assessed at considerably lower rates. Lots, which are occupied by e i t h e r designed walk-up or hi g h - r i s e apartments, are assessed at a uniform rate of $100 per front foot when the l o t i s 125 feet deep and $102 per front foot when the l o t depth i s 130 feet. The assessed value rates per front foot f o r apartment s i t e s are uniform throughout the study area regardless of the area of the l o t , or i t s l o c a t i o n within the area. Table II shows that the mean assessed value of apartment l o t s i n the study area i s $100 per front foot. The land assessment rates that are used for other types of r e s i d e n t i a l l o t s including s i n g l e family dwellings, boarding or rooming houses and converted multiple family dwellings are somewhat more complex than those associated with commercial or designed apartment s i t e s . The most common rates f o r l o t s that are 125 feet deep are $64.80 per front foot f o r 25 foot wide l o t s and $64.40 per front foot for 50 foot wide l o t s . Lots that are 130 feet deep are assessed at $68.30 per front foot. Lots which are 125 feet deep, and are located opposite schools and1 playing f i e l d s , are assessed at a somewhat lower rate of $58.00.per front foot, due to the detrimental e f f e c t of the noise generated by these f a c i l i t i e s on adjacent property values. The mean assessed value of land that i s used f o r these r e s i d e n t i a l uses i n the study area i s $65 per front foot. 45 Land which i s vacant of buildings i s also assessed at d i f f e r e n t rates depending upon the use of the property. Land which i s used f o r surface parking and i s associated with a commercial function such as an o f f i c e building i s assessed at a rate of $200 per front foot. Land, which i s used f o r surface parking related to r e s i d e n t i a l property, and unused land, i s assessed at a rate of $100 per front foot. The mean assessed value of vacant land i s $130 per front foot. The information i n the preceeding paragraphs indicates that there i s a strong r e l a t i o n s h i p between e x i s t i n g land use and land assessment rates. The l o c a t i o n of property within the study area appears to have l i t t l e e f f e c t on land assessment rates. 4. The S e l l i n g P r i c e of Land i n the Study Area Records of land sales i n Regina are not maintained on a comprehensive basis. The only r e a d i l y a v a i l a b l e source of land sales information i s the incomplete records that are c o l l -ected and maintained by the c i t y assessor. These records i n -clude only those sales where one or both parties of the trans-a c t i o n were w i l l i n g to reveal the s e l l i n g p r i c e . The number of property sales i n the study area where the sale price can be used as an i n d i c a t i o n of the market value of land i s r e l a t i v e l y l i m i t e d because, the s i t e must eithe r be vacant of improvements at the time of the sale, or the improve-ments must have l i t t l e use value and be removed shortly there-a f t e r . Given the above mentioned r e s t r i c t i o n s , only 15 prop-e r t i e s were exchanged between 1961 and 1970 f o r which sale 46 prices are a v a i l a b l e and can be used as indications of land value.! See Table I I I , page 47. The p r i c e at which land i n the study was exchanged exhibits a considerable degree of v a r i a t i o n , as shown i n Table III. The lowest sale price for land was $320 per front foot and the highest was $814 per front foot. The v a r i a t i o n does not appear to be explainable i n terms of e i t h e r appreciation or depreciation over time, since the v a r i a t i o n i s e r r a t i c r e l a t i v e to time. Dividing the combined t o t a l sale p r i c e of a l l the properties by t h e i r combined t o t a l frontage, reveals a mean sale p r i c e of $497 per front foot. The f i f t e e n properties were a l l occupied by large si n g l e family detached houses, or single family attached houses at the time of the l i s t e d sales, and the structures were a l l demolished within one year of the sale. The s i t e s have a l l been redeveloped with walk-up or h i g h - r i s e apartment buildings, except the two which were sold for $533 per fron foot and $543 per front foot, and are s t i l l vacant. This would appear to i n -dicate that the s e l l i n g prices represent the purchasor's opinion of the value of land with l i t t l e consideration to the value of the buildings on the proerties at the time of the sale. 5. The S e l l i n g Price of Residential Land i n Developing, Subdivisions'  Sales information for r e s i d e n t i a l l o t s i n developing subdivisions i n Regina i s also r e l a t i v e l y sparce. The only source of a v a i l a b l e information i s the incomplete records 47 TABLE III Land Sales In The Residential-Business T r a n s i t i o n Zone Year Frontage Sale Price Sale P r i c e ' Sale (feet) ($) /Front Foot ($) 1952 140.0 $113,960 $814 1963 97.0 34,920 360 1964 50.0 21,000 420 1955 50.0 22,500 450 1965 50.0 24,000 480 1965 75.0 39,975 533 1965 75.0 40,725 543 1966 87.5 28,000 320 1966 150.0 61,950 413 1957 100.0 38,000 22,000 380 1968 50.0 440 1968 50.0 24,500 490 1969 75.0 32,400 432 1969 37.5 26,063 695 1970 200.0 110,000 $639,993 550 Total 1,287.0 Mean Sale Price = ""1237 = $ 4 9 7 p e r F r o n t F o o t ' maintained by the c i t y assessor. A s i g n i f i c a n t number of sales transactions i n two subdivisions are a v a i l a b l e . The f a c t that one i s the most prestigeous new r e s i d e n t i a l area of the c i t y , while the other i s one of the most modest, means that both extremes of the spectrum of r e s i d e n t i a l land sales are covered. A t o t a l of 43 f u l l y serviced s i n g l e family r e s i d e n t i a l l o t s i n Al b e r t Park, the most prestigeous and expensive sub-d i v i s i o n , were sold i n 1969 and 1970. The s e l l i n g p r i c e of these 43 l o t s varied from a low of $72 per front foot to a high of $91 per front foot as shown i n Table IV. The degree of v a r i a t i o n however, i s less extreme than i t would appear, 48 only one l o t sold for $72 per front foot and only three sold for $91, The remaining l o t s varied i n p r i c e from $77 to $87 per front foot with concentrations at ei t h e r extreme of t h i s range. Dividing the t o t a l p r i c e paid for a l l the l o t s by the combined frontages of the l o t s , produces a mean sale p r i c e of $84 per front foot. TABLE IV Land Sales In Albert Park Subdivision" Number Sale Price Total Total P r i c e of /Front Foot Frontage ($) Lots ($) (feet) 1 72.00 59 4,428.00 10 77.00 599 46,123.00 2 78.00 124 9,672.00 1 85.00 62 5,270.00 10 86.00 652 56,072.00 16 87.00 992 86,304.00 3 91.00 204 18,564.00 43 2692 $226,253.00 Mean Sale Price = - " 2 6 9 2 " - = $ 8 4 P e r Front Foot. "One of the l o t s that sold f o r $78 per front foot was sold i n 1970, the remaining l o t s were a l l sold i n 1969. Sales information i s only a v a i l a b l e f o r eleven f u l l y serviced l o t s i n Glencairn, the more modest subdivision. The range of v a r i a t i o n from the lowest to the highest sale p r i c e i s s i m i l a r to that found i n Albert Park, but the concentration around the two prices i s lacking i n Glencairn, Prices range from a low of $37, to $56 per front foot, and are r e l a t i v e l y uniformly d i s t r i b u t e d betwen these two extremes, as can be seen i n Table V. Dividing the t o t a l p r i c e paid f o r a l l of the l o t s by the combined frontages y i e l d s a mean sale p r i c e of $46 per front foot. TABLE V Land Sales i n Glencairn Subdivision* Number Sale Price Total Total P r i c e of /Front Foot Frontage ($) Lots ($) (feet) 1 37.00 54 1,998.00 2 42.00 100 4,200.00 2 42.50 100 4,250.00 1 47.00 54 2,538.00 2 48.00 109 5,232.00 1 49.00 54 2,646.00 1 52.00 54 2,808.00 1 56.80 50 2,800.00 11 575 26,472.00 Mean Sale Price = = $46 per Front Foot. *The l o t that sold f o r $37 per front foot and one of the l o t s that sold for $42.50 per front foot were purchased i n 1970, the remaining l o t s were a l l purchased i n 1969. 6. The Assessment of Residential Land i n Developing Subdivisions The C i t y of Regina i s divided into a number of r e s i -d e n t i a l assessment d i s t r i c t s . A uniform r e s i d e n t i a l land assess-ment value i s assigned to each d i s t r i c t and a l l s i n g l e family r e s i d e n t i a l land i n each d i s t r i c t i s assessed at the same value per front foot.** In A l b e r t Park, one of the developing r e s i d e n t i a l subdivisions that was selected f o r examination, the standard s i n g l e family r e s i d e n t i a l land assessment rate i s $43 per front f o o t . The standard rate of $43 per front foot i s used as the land assessment value for a l l s i n g l e family r e s i d e n t i a l l o t s 50 i n the subdivision. This i s the highest 1970 r e s i d e n t i a l land assessment rate for developing subdivisions i n Regina, but the rate used i n several older subdivisions i s somewhat higher. The standard s i n g l e family r e s i d e n t i a l land assess-ment rate that i s used i n Glencairn, the other selected sub-d i v i s i o n , at $25 per front foot i s considerably lower than that used i n Albert Park. This i s the lowest rate used f o r develop-ing subdivisions i n 1970 and r e f l e c t s the less desirable loca-t i o n adjacent to two major t r a f f i c a r t e r i a l s and an i n d u s t r i a l area. The only lower land assessment rates are found i n older areas of the c i t y which are becoming rundown. A l l of the si n g l e family r e s i d e n t i a l l o t s i n Glencairn were assessed at the stan-dard rate of $25 per front foot i n 1970. 7. Assessed Land Value Expressed As A Percentage Of Sales P r i c e Recorded sales information f o r l o t s i n the Glencairn subdivision indicated that the s e l l i n g p r i c e f o r si n g l e family r e s i d e n t i a l l o t s varies between $37 and $56 a front foot, pro-ducing a mean sale p r i c e of $46. Expressing the standard land assessment rate that the c i t y assessor uses i n t h i s area as a percentage of sales p r i c e , reveals that i t i s equal to 44.5% of the highest, 67.6% of the lowest and 54.3% of the mean sale p r i c e . The prices that were received f o r the sale of single family r e s i d e n t i a l l o t s i n the Albert Park subdivision are con-siderably higher than those i n Glencairn. Single family l o t s 51 sold f o r prices ranging from a low of $72 per front foot to a high of $91 and the mean sale price was $84 per front foot. When the standard land assessment rate that i s used i n A l b e r t Park i s expressed as a percentage of sales p r i c e , the respec-t i v e percentages f o r low, high and mean sale prices are very s i m i l a r to those found i n Glencairn. The standard assessment rate of $43 per front foot i n Albert Park i s equal to 59.7% of the lowest, 47.3% of the highest and 51.2% of the mean sale p r i c e . Expressing land assessment rates as a percentage of sales p r i c e i n the residential-business t r a n s i t i o n zone i s some-what more complicated than i n the two r e s i d e n t i a l subdivisions because, a number of d i f f e r e n t assessment rates are used, and sale prices e x h i b i t a greater degree of v a r i a t i o n . In order to si m p l i f y the process somewhat, only the standard rate f o r l o t s 125 feet i n depth, and 50 feet or greater i n width w i l l be used. The examination of sale prices f o r land i n the r e s i -dential-business t r a n s i t i o n zone between 1962 and 1970 revealed that they varied from a low of $320 per front foot to a high of $814 per front foot, with a mean s e l l i n g p r i c e of $497 per front foot. A standard land assessment rate of $64.40 per front foot i s used to assess land that i s used f o r r e s i d e n t i a l pur-poses other than walk-up or hig h - r i s e apartments. This rate i s equal to 20.1% of the low s e l l i n g p r i c e , 7.9% of the highest s e l l i n g price, and 13.0% of the mean sale price. 52 A standard land assessment rate of $100 per front foot i s employed for apartment building s i t e s and l o t s which are vacant of buildings and are not associated with commercial a c t i v i t i e s . This standard rate i s equal to 31,3% of the lowest sale price, 12.3% of the highest, and 20,1% of the mean sale p r i c e . Land that i s used f o r commercial purposes including parking l o t s i s assessed at the considerably higher rate of $200 per front foot. When t h i s rate i s expressed as a percent-age of sale p r i c e s , i t works out to 62.5% of the lowest s a l e p r i c e , 24.6% of the highest, and 40.2% of the calculated mean sale p r i c e . The uniformity or lack of uniformity between land assessment practices i n the residential-business zone and the developing r e s i d e n t i a l subdivisions w i l l be examined i n the following chapters. 53 C H A P T E R III FOOTNOTES 1. Urban Municipality Act, 1970, 18 E l i z . 2, Chapter 78. 2. Ibid., sec. 360. 3. Ibid., sec. 320. 4. Weiner and Hoyt, Real Estate, p. 144. 5- Frederick r Case1 » Real Estate,(Boston; A l l y n and 3acon, Inc v, 1956), p. 189. 6. C i t y of Regina Assessor's Department, "Assessment for Taxation - C i t y of Regina - 1969". 1969. 7. Ibid. 8. The land use information i s the product of a land use f i e l d survey which was carr i e d out by the author i n July, 1970. 9. C i t y of Regina, Zoning By-law, 1968. 10. C i t y of Regina, Tax Assessment Building Cards. 11. C i t y of Regina, Property Tax Assessment Records. 54 C H A P T E R IV NON-UNIFORM LAND ASSESSMENT and ITS CONSEQUENCES  1. Introduction The s e l l i n g prices of land i n each of the two devel-. oping subdivisions display so l i t t l e v a r i a t i o n , that the mean sale p r i c e i s assumed to be an objective i n d i c a t o r of market value i n these two areas. The range of v a r i a t i o n i n the s e l l i n g p r i c e of land i n the residential-business t r a n s i t i o n zone how-ever i s so great, and the number of i n d i v i d u a l sales so small, that i t i s deemed inadvisable to assume that the mean sale p r i c e i s i n d i c a t i v e of market value. An appraiser i n the C i t y Assess-or's Department indicated that on the basis of appraisals he had made and discussions with other appraisers, the market value of land i n the residential-business t r a n s i t i o n zone varied between $500 and $900 per front foot.* The v a r i a t i o n i n land values depended pr i m a r i l y upon the l o c a t i o n of the property within the zone, and the purpose for which the land was used was of l i t t l e consequence. The minimum figur e of $500 per front foot i s used as an objective i n d i c a t o r of market value for purposes of comparison i n the following anal y s i s , to avoid over estimating the magnitude of va r i a t i o n s i n land assessment values and t h e i r consequences. 2. Uniformity of Land Assessment Within The Residential-Business T r a n s i t i o n Zone The rate which" land' i n the residentiaT-business trans-55 i t i o n zone i s assessed at, as was seen i n the preceeding chap-te r , varies considerably depending upon the use of the land. Appraisers indicate that the market value of land i n the area bears l i t t l e r e l a t i o n s h i p to the e x i s t i n g use of the land. This i s i n agreement with the view of land economists, who maintain that the value of urban land i s l a r g e l y a function of i t s l o c -a tion, and p o t e n t i a l use as prescribed by l e g i s l a t i v e controls 2 such as zoning by-laws. I t follows therefore, that assessment rates which vary with e x i s t i n g use when compared to an objective estimate of market value which i s constant r e l a t i v e to e x i s t i n g use, w i l l exhibit a lack of uniformity. The standard land assessment rate of $64.40 per front foot which i s applied to land used for r e s i d e n t i a l purposes other than designed apartments, i s only equal to 12.9% of the estimated market value of $500. Land which i s vacant of b u i l d -ings and not associated with commercial a c t i v i t i e s , and land which i s occupied by designed apartment buildings i s assessed at a standard rate of $100 per front foot. This assessment rate i s equal to 20.0% of the $500 per front foot estimated market value, or nearly twice as high as the rate on other r e s i -d e n t i a l land. Land which i s vacant of buildings and i s assoc-iated with commercial a c t i v i t i e s , and land which i s occupied by buildings used for commercial purposes, i s assessed at a considerably higher standard rate of $200 per front foot, or 40.0% of estimated minimum market value. The comparison of standard assessment rates as per-56 centages of estimated market value indicates that there i s a lack of uniformity i n land assessment practices within the residential-business t r a n s i t i o n zone. 3. Uniformity of Land Assessment In The Residential-Business T r a n s i t i o n Zone Relative To Developing Res i d e n t i a l Subdivisions  The analysis of recorded land sales data i n the pre-ceeding chapter revealed the mean sale p r i c e of land i n Glen-c a i r n subdivision to be $46 per fron foot and the mean sale p r i c e of land i n Albert Park subdivision was $84 per front foot. The standard assessment rate that i s used for s i n g l e family r e s i d e n t i a l land i n Glencairn i s $25 per front foot or 54.3% of the mean sale p r i c e . The standard assessment rate that i s used for s i n g l e family r e s i d e n t i a l land i n A l b e r t Park i s somewhat higher i n absolute terms at $43 per front foot, but lower r e l a t i v e to the mean sale p r i c e of 51.2%. Although there i s a s l i g h t difference between the standard assessment rates that are used i n these two subdivisions when expressed as per-centages of the mean sale p r i c e , i t i s so small as to be i n s i g -n i f i c a n t . The mean sale price of land i n Glencairn and Albert Park i s assumed to be an i n d i c a t o r of market value, f o r purposes of comparing land assessment rates. The $64.40 per front foot standard assessment rate, that i s applied to land i n the residential-business t r a n s i t i o n zone used for r e s i d e n t i a l purposes other than designed apart-ments, i s equal to 12.9% of the $500 per f r o n t foot market value. Comparing t h i s percentage with the standard assessment 57 rates i n Albert Park and Glencairn expressed as percentages of market value, 51.2% and 54.3% respectively, leaves l i t t l e doubt that non-apartment r e s i d e n t i a l s i t e s i n the t r a n s i t i o n zone are assessed at a lower proportion of market value. The s i g n i f i c a n c e of the r e l a t i v e l y low standard ass-essment rate, $64.40 per front foot, can be more r e a d i l y app-rec i a t e d by comparing i t with what i t would be i f i t was the same proportion of estimated market value as the rates used i n Albert Park and Glencairn. I f the non-apartment r e s i d e n t i a l land i n the t r a n s i t i o n zone i s assessed at the same proportion of market value as i t i s i n Albert Park, 51.2%, the assessment rate would be $256 per front foot or $191.60 higher than the present rate of $64.40 per front foot. I f the non-apartment r e s i d e n t i a l land i s assessed at the same proportion of market value as i t i s i n Glencairn, 54.3%, the rate r i s e s to $271.50 per front foot which i s $207.10 higher than the e x i s t i n g stan-dard rate of $64.40 per front foot. I t i s obvious therefore, that using the r a t i o of assessed value to market value as a standard for comparison, the land i n the residential-business t r a n s i t i o n zone which i s used f o r r e s i d e n t i a l purposes other than designed apartments, i s assessed at a s i g n i f i c a n t l y lower l e v e l than s i n g l e family r e s i d e n t i a l land i n Al b e r t Park and Glencairn. Land that i s used for designed apartment bu i l d i n g s i t e s i n the residential-business t r a n s i t i o n zone i s assessed at a standard rate of $100 per front foot or 20.0% of the es-58 timated market value of $500 per front foot. This i s consid-erably lower than rates i n Albert Park and Glencairn where land i s assessed at 51.2% and 54.3% of the market value r e s p e c t i v e l y . I f the land used for apartment s i t e s i n the t r a n s i t i o n zone i s assessed at the same proportion of market value as r e s i d e n t i a l land i n Albert Park, the rate i s $256 per front foot or $156 higher than i t i s under the e x i s t i n g assessment p r a c t i c e i n 1970. I f the apartment s i t e s i n the t r a n s i t i o n zone are assessed at the same proportion of market value as the si n g l e family r e s i d e n t i a l land i n Glencairn, the assessment rate be-comes $271.50 per front foot, an increase of $171.50. The ob-vious conclusion to be drawn from the foregoing, i s that land used f o r designed apartment s i t e s i n the t r a n s i t i o n zone i s assessed at a s i g n i f i c a n t l y lower proportion of market value than the s i n g l e family r e s i d e n t i a l land i n Glencairn and Albert Park. Land that i s vacant of buildings and i s not a s s o c i -ated with commercial buildings i s also assessed at $100 per front foot i n the residential-business t r a n s i t i o n zone, so that the preceding analysis for apartment s i t e s and the conclusions also apply to t h i s land. Land that i s used for commercial b u i l d i n g s i t e s i n the t r a n s i t i o n zone i s assessed at a somewhat higher rate of $200 per front foot which i s 40.0% of market value. This rate of $200 per front foot i s also employed for land that i s vacant of buildings and i s associated with commercial building s i t e s , so 59 that the following analysis also applies to the land i n t h i s category. I f t h i s land i s assessed at the same proportion of market value as the r e s i d e n t i a l land i n Albert Park, 51.2%, the assessed value becomes $256 per front foot or $56 higher. I f the land i s assessed at 54.3% of market value or the same as r e s i d e n t i a l land i n Glencairn, i t involves an increase of $71.50 to $271.50 per front foot. On the basis of t h i s comparison i t appears that land that i s used f o r commercial building s i t e s , and vacant land associated with them i n the r e s i d e n t i a l - b u s i -ness t r a n s i t i o n zone, i s under assessed by $56,00 per front foot r e l a t i v e to r e s i d e n t i a l land i n Albert Park, and $71.50 per front foot r e l a t i v e to r e s i d e n t i a l land i n Glencairn. In order to s i m p l i f y c a l c u l a t i o n s f o r the remaining portion of t h i s chapter, an assessed value of $250 per front foot f o r land i n the r e s i d e n t i a l - business t r a n s i t i o n zone i s considered, to provide a uniform assessment, r e l a t i v e to the developing subdivisions. 4. Under Assessed Land Values, The Tax Base and the M i l l Rate In order to evaluate the consequences of under ass-essing land i n the residential-business zone r e l a t i v e to the developing subdivisions, i t i s necessary to compare the actual 1970 tax base, m i l l rate, and the d i s t r i b u t i o n of taxes, with what they would be i f the land was uniformly assessed. See Table VI , page 60 . . Table I I i n Chapter H I contains a summary of land 60 TABLE VI Assessed Land Values i n the Residential-Business T r a n s i t i o n Zone Using a Uniform Land Assessment Rate of $250 per Front Foot  Land Use Frontage Category (feet) Assessed Value per Front Foot T o t a l Assessed Value Vacant land 1,322 Commercial 1,164 Apartments 5,183 Other r e s i d e n t i a l 14,116 $ 250.00 250.00 250.00 250.00 $ 330,500.00 Total 21,785 $ 250.00 291,000.00 1,295,750.00 3.529.000.00 $5,446,250.00 assessment information f o r the residential-business t r a n s i t i o n zone derived from actual 1970 assessment records. Table VI contains land assessment information for the same area using the standard $250 per front foot value that i s assumed to be the same proportion of estimated market value as assessment rates i n developing subdivisions. The assessed value of a l l taxable land i n the residential-business t r a n s i t i o n zone i s equal to $1,839,310, using the 1970 assessment rates, and the t o t a l tax base i s $213,434,710 f o r the whole c i t y . The 1970 m i l l rate of 111 m i l l s , when applied to the t o t a l tax base, produced a t o t a l tax revenue of $23,691,253.3 The taxable land i n the residential-business trans-i t i o n zone has a t o t a l frontage of 21,785 feet. I f the taxable land i s assessed at 50% of estimated market value, $500 per front foot, as shown i n Table VI, the t o t a l assessed value of the land i n the t r a n s i t i o n zone increases to $5,446,250.4 The increase i n the assessed value of land i n the t r a n s i t i o n zone 61 increases the t o t a l tax base to $217,041,670. The larger tax base i s capable of r a i s i n g the same amount of revenue as the 1970 Tax base does but a lower m i l l rate w i l l be required. The new m i l l rate i s calculated by-d i v i d i n g the new tax base into the required revenue and multi-plying the answer by 1000, which produces a new m i l l rate of 1C9.1553 m i l l s . 5 5. R e d i s t r i b u t i o n of Taxes i n the Residential-Business T r a n s i t i o n Zone  The d i s t r i b u t i o n of r e a l estate property taxes i n the residential-business t r a n s i t i o n zone under the system of assessment employed i n the C i t y of Regina i n 1970 i s portrayed i n Table VII.. , It i s worthy of note that the tax on the three categ-ories of r e s i d e n t i a l property improvements i s r e l a t i v e l y u n i -form, whereas the tax on the land i n these three categories varies widely. The larger proportion of the t o t a l taxes on improvements f o r apartments r e l a t i v e to other r e s i d e n t i a l property r e f l e c t s the higher i n t e n s i t y of development on these s i t e s . Table VIII shows how the r e a l estate property taxes would be d i s t r i b u t e d i n the t r a n s i t i o n zone when a l l of the land i s assessed at a uniform rate of $250 per fron foot, and a revised m i l l rate of 109.16 m i l l s i s used to c a l c u l a t e the tax. The extremely high r a t i o of the tax on land to the tax on improvements for the other r e s i d e n t i a l category, r e l a t i v e TABLE VII The D i s t r i b u t i o n of Taxes Within the Residential-Business Transition 1970 Assessment Rates and M i l l Rate Zone Using the Land Use Category Tax on Land Dollars (%) Tax on Improvements Dollars Total Dollars (7o) Vacant Land 19,196 9.4 19,196 3.2 Commercial 25,027 12.3 40,559.00 65,586 11.0 Apartments High-rise 12,034 5.9 110,560.00 122,594 20.5 Apartments Walk-up 45,980 22.5 131,630.00 177,610 29.7 Residential Other 101,926 49.9 110,245.00 212,171 35.6 Tota l $204,163 100.0 $392,995.00 $597,158 100.0 TABLE VIII The D i s t r i b u t i o n of Taxes Within the Residential-Business Transition Zone Using, a Uniform Land Assessment Rate of $250 Per Front Foot  Land Use Category Tax on Dollars Land (%) Tax on Improvements Dollars T o t a l Dollars (%) Vacant Land 36,077 5.9 36,077 3.7 Commercial 31,766 5.3 39,887 71,653 7.4 Apartments High-rise 29,500 5.0 108,728 138,228 14.1 Apartments Walk-up 111,945 18.8 129,446 241,391 24.9 Residential Other 385,225 65.0 108,419 493,644 50.1 Total $594,513 100.0 $386,480 $980,993 100.0 ON CO TABLE IX Changes i n the D i s t r i b u t i o n of Taxes Within the Residential-Business T r a n s i t i o n Zone Due to Under Assessing Land i n the Tr a n s i t i o n Zone  Land Use Category Tax on Dollars Land ( % ) Tax on Improvements Dollars Total Dollars (7c) Vacant Land - 16,881 +3.5 - 16,881 -0.5 Commercial - 6,739 +7.0 + v. 672 - -6,067 +3.6 Apartments High-rise - 17,466 +0.9 + 1,832 - 15,634 +6.4 Apartments Walk-up - 65,965 +3.7 + 2,184 - 63,781 +5.0 Residential Other - 283,299 -15.1 + 1,826 - 281,473 -14.5 Total -$390,350 +$6,514 -$383,836 Note: The sign indicates a decrease and the "+" sign indicates an increase. 65 to the apartments, r e f l e c t s the low i n t e n s i t y of development for non-apartment r e s i d e n t i a l property. The s h i f t i n the d i s t r i b u t i o n of r e a l estate taxes that r e s u l t s when land i n the t r a n s i t i o n zone i s assessed at the 1970 rates, rather than at approximately the same propor-t i o n of market value as land i n developing subdivisions, i s shown i n Table XI. Very l i t t l e change i n the tax on improve-ments i s i n evidence, with only a s l i g h t increase of $6,514 fo r a l l categories. The increase i s r e l a t i v e l y evenly spread over the r e s i d e n t i a l property, with a somewhat smaller change i n the tax on commercial improvements. S i g n i f i c a n t decreases i n the tax on a l l categories of land i s shown, but the decrease i n the tax on the land i n the other r e s i d e n t i a l category i s greater i n both absolute and r e l a t i v e terms. The larger decrease i n the tax on the non-apartment r e s i d e n t i a l land i s due to the very low assessment rate of $64.40 per front foot that was used on t h i s property i n 1970. The t o t a l decrease i n the tax on land i n the trans-i t i o n zone of $390,350, i s o f f s e t to some extent by the increase i n the tax on improvements, but the net tax decrease of $383,836 i s s h i f t e d to other property. The tax on land f o r a l l land use categories, except Other Residential, increases s l i g h t l y as a percentage of the t o t a l tax on land i n the t r a n s i t i o n zone, whereas the tax on the Other Residential category decreases by 15.1%, and indicates a r e l a t i v e s h i f t of tax from the l a t t e r land use category. 66 The consequences of these s h i f t s i n the d i s t r i b u t i o n of taxes are examined, following a discussion of how the d i s -t r i b u t i o n of taxes i s effected i n the other areas of the c i t y . 6. Redistribution of Taxes Throughout the C i t y The c i t y of Regina i s divided into seven areas as shown on Figure 2, for the purpose of examining s h i f t s i n the d i s t r i b u t i o n of taxes brought about by the p o l i c y of under-assessing land values i n the residential-business t r a n s i t i o n zone. Areas 1, 2 and 3 include the predominately sing l e family and low density multiple family r e s i d e n t i a l areas of the c i t y . Area 4 i s almost exclusively i n d u s t r i a l land, and Area 5 includes a mixture of older s i n g l e family residences, new medium density apartments, l i g h t i n d u s t r i a l property and low density commercial buildings. The Central Business D i s t r i c t contains the high density o f f i c e buildings, the major department stores, and high q u a l i t y r e t a i l stores, hotels, theatres and restaurants. The remaining area i s the resident-ial-business \ t r a n s i t i o n zone which was described i n d e t a i l e a r l i e r . Table X shows how the r e a l estate property and busi-ness tax was d i s t r i b u t e d among the seven areas, and between . land, improvements and the business assessment, using the 1970 land assessment rates. The taxes i n Table X were calculated by multiplying the 1970 assessed values i n each area desig-nated, by the 1970 m i l l rate of 111. m i l l s . The small amount of the tax on land i n the r e s i -67 TABLE X The D i s t r i b u t i o n of Taxes Using the 1970 Assessments and M i l l Rate Area Tax on Land Dollars (%) Tax on Improvements Dollars Total Tax Dollars <%) 1 1,620,832 18.5 2,711,233 4,332,065 18.3 2 2,254,363 25.6 3,219,949 5,474,312 23.1 3 956,579 10.9 1,757,716 2,714,295 11.5 4 429,087 4.9 744,480 1,173,567 5.0 Central 1,955,323 22.3 2,580,143 4,535,466 19.1 Business D i s t r i c t : 1,357,486 15.5 937,715 2,295,201 9.7 Res-Bus. Trans. Zone 204,163 2.3 392,994 597,157 2.5 Real Estate Total 8,777,832 100.0 12,344,231 21,122,063 89.2 Business Tax 2,569,190 10.8 Tota l $8,777,832 100.0 $12,344,231 $23,691,253 100.0 TABLE•XI The D i s t r i b u t i o n of Taxes Using a Uniform Land Assessment Kate of $250 per Front Foot i n the Residential-Business T r a n s i t i o n Zone Area Tax on Land Dollars (%) Tax on Improvements Dollars Total Dollars (%). 1 1,593,962 17.7 2,666,292 4,260,254 18.0 2 2,216,992 24.6 3,166,574 5,383,566 22.7 3 940,711 10.4 1,728,579 2,669,301 11.3 4 421,974 4.6 732,139 1,154,113 4.9 5 1,922,910 21.3 2,537,374 4,460,284 18.8 Central Ru s i n es s-Dis t r i e t 1,334,983 14.8 922,171 2,257,154 9.5 Res-Bus. Trans. Zone 594,513 6.6 386,480 980,993 4.1 Real Estate T o t a l 9,026,056 100.0 12,139,609 21,165,665 89.3 Business Tax 2.526.602 10.7 Total $9,026,056 100.0 $12,139,609 $23,692,267 100.0 TABLE XII Changes i n the D i s t r i b u t i o n of Taxes Due to Under-Assessing Land Value i n the Residential-Business T r a n s i t i o n Zone  Area Tax on Dollars Land C/o) Tax on Improvements Dollars T o t a l Dollars (%) 1 + 26,870 + 0.8 + 44,941 +71,811 + 0.3 2 + 37,371 + 1.0 + 53,375 +90,746 + 0.4 3 + 15,857 + 0.5 + 29,137 +44,994 + 0.2 4 + 7,113 + 0,3 + 12,341 +19,456 +. - 0.1 5 + 32,418 + 1.0 + 42,769 +75,182 + 0.3 Central Business D i s t r i c t + 22,503 + 0.7 + 15,544 +38,047 + 0.2 Res-Bus, Trans. Zone 390,350 - 4.3 + 6,514 -383,886 - 1.6 Real Estate Total - 248,224 0.0 + 2 0 4^22 - 43,60-2 + .0.1 Business Tax f 42.588 0...1 TOTAL - 248,224 0.0 + 204,622 + 1,014 Note: The sign indicates a decrease, and the "+" sign indicates an increase. 71 dential-business t r a n s i t i o n zone, r e l a t i v e to the t o t a l tax on land i n the c i t y , i s of p a r t i c u l a r i n t e r e s t . I t should also be pointed out that the proportion of tax on land, r e l a t i v e to improvements i n the t r a n s i t i o n zone, i s somewhat lower than i n the other areas of the c i t y . Table XI shows how the 1970 taxes would be d i s t r i -buted i n Regina, i f land i n the residential-business trans-i t i o n zone was assessed at a uniform $250 per front foot. The taxes i n t h i s table were calculated by changing the assessed value1, of land i n the residential-business zone, adjusting the m i l l r a t e to r e f l e c t the change, and then multiplying the assessed values by the new m i l l rate of 109.16 m i l l s . The most s i g n i f i c a n t change i s the somewhat la r g e r amount of the tax on the land i n the residential-business zone, and the f a c t that i t i s now greater than the tax on improve-ments . A more complete picture of the changes i n the d i s t r i -bution of taxes that are brought about by the p r a c t i c e of under-assessing land values i n the residential-business trans-i t i o n zone can be seen i n Table XII. The tax on land i n a l l of the areas other than the t r a n s i t i o n zone, increase by amounts varying between $7,113 and $37,371, while the tax on land i n the t r a n s i t i o n zone decreases by $390,350. The decrease i n the tax on land i n the t r a n s i t i o n zone i s o f f s e t to some extent by an increase of $6,514 i n the tax on l a n d , but the net e f f e c t i s a t o t a l decrease i n the 72 tax on r e a l estate property i n the t r a n s i t i o n zone of $383,836. The $390,350 decrease i n the tax on land i n the t r a n s i t i o n zone i s r e d i s t r i b u t e d by increasing the tax on other compo-nents of the tax base. The tax on land outside of the trans-i t i o n zone i s increased by $142,126, while the tax on a l l of the taxable improvements i n the c i t y i s increased by $204,622 and the tax on business assessments i s increased by $42,588. The p o l i c y of under-assessing land i n the r e s i d e n t i a l -business zone decreases the burden of taxation on land i n the zone, but the burden of taxation f o r the c i t y as a whole r e -mains the same as the tax i s s h i f t e d from one type of property to another. The consequences of these s h i f t s i n the burden of taxation are examined i n the following sections of t h i s chapter. 7. The Consequences of Redistributing the Real Estate Property Tax i n Regina  The following sections of t h i s chapter are devoted to an examination of the consequences of the taxation practice i n Regina, which under-assesses land i n the r e s i d e n t i a l - b u s i -ness t r a n s i t i o n zone, r e l a t i v e to other land i n the city,! and r e d i s t r i b u t e s r e a l estate property taxes. 8. Property Values A d e t a i l e d d e s c r i p t i o n of how r e a l estate property taxes e f f e c t property values was provided i n Chapter I I , so that only a b r i e f statement i s made here to avoid excessive r e p e t i t i o n . A tax. on land cannot be shifted, and. is, capitaLiz.ed„-i 73, This means that an increase i n the tax on land decreases the value of the land, and a decrease i n the tax on land causes the value of the land to increase. A tax on improvements however, i s not c a p i t a l i z e d , so that increasing or decreasing the tax on improvements does not e f f e c t property values.^ Table IX and Table XII show that the pr a c t i c e of under-assessing land i n the residential-business t r a n s i t i o n zone causes the tax on a l l categories of land i n the trans-i t i o n zone to decrease, while Table XII indicates that the tax on land i n a l l other areas of the c i t y increases as a re-s u l t of the same po l i c y . Because taxes on land are capita-l i z e d , the value of the land i n the t r a n s i t i o n zone w i l l i n -crease and the value of land i n a l l the other areas of the c i t y w i l l decrease. Table IX and Table XII indicate that the under-assessment of land i n the t r a n s i t i o n zone, causes the tax on improvements to increase i n the t r a n s i t i o n zone, and a l l other areas i n the c i t y , but since taxes on improvements are not c a p i t a l i z e d , property values are not affected. 9. Rents The d e s c r i p t i o n of r e a l estate taxes and re l a t e d theories i n Chapter II indicates that some economists maintain that taxes on land do not e f f e c t rents because they are cap-i t a l i z e d , but taxes on improvements are s h i f t e d through rent changes and are not c a p i t a l i z e d . Although a l l economists do not. support t h i s theory i t i s assumed to be v a l i d f o r purposes of analysis. An increase i n the tax on improvements i s assumed to increase rents, and a decrease i n the tax i s assumed to de-crease rents. The decrease i n the tax on land i n the t r a n s i t i o n zone, and the increase i n the tax on land i n a l l the other areas of the c i t y as shown i n Table XII, w i l l not e f f e c t rents, because they are c a p i t a l i z e d into the value of the land. The increase i n the tax on improvements i n the t r a n s i t i o n zone and the other areas of the c i t y w i l l increase rents i n a l l parts of the c i t y . 10. The D i s t r i b u t i o n of Wealth The review of r e a l estate property tax and economic theories i n Chapter II indicates that a tax on land i s capi-a l i z e d into the value of land, and i s borne by the owner of the land in the form of a c a p i t a l loss as the value of land de-creases. Conversely, a decrease i n the tax on land value i s c a p i t a l i z e d into the value of the land and the owner reaps a c a p i t a l gain. According to the theories described i n Chapter 11, a tax on improvements i s not c a p i t a l i z e d and i s passed on by the owners of property i n the form of higher rents or prices for services. A decrease i n the tax on improvements however, i s passed on by decreasing rents and price s . The exception to t h i s rule i s the owner-occupant of r e s i d e n t i a l property who i s unable to pass on taxes on improvements i n the form of higher rents, and must absorb them. Table XII shows that under-assessing land value i n 75 the residential-business t r a n s i t i o n zone decreases the tax on lard i n the t r a n s i t i o n zone and increases the tax on land i n a l l the other areas of the c i t y . Assuming that the theory of the e f f e c t s of taxes on land values i s correct, the value of land i n the t r a n s i t i o n zone increases and the value of land i n the other areas of the c i t y decreases. The owners of land i n the t r a n s i t i o n zone reap a c a p i t a l gain and the oxvners of land i n other parts of the c i t y w i l l s u f f e r a c a p i t a l l o s s . Table XII also indicates that the tax on improve-ments i n a l l areas of the c i t y increases. Because taxes on improvements are passed on i n the form of higher rents, and prices or !borne by owner-occupants, the tax on improvements i s a c t u a l l y paid by tenants and consumers. The under-assessment of land i n the t r a n s i t i o n zone therefore, r e s u l t s i n a s h i f t of wealth to the owners of r e a l estate property i n the residential-business t r a n s i t i o n zone from the owners of r e a l estate property i n the other areas of the c i t y , and the tenants and consumers i n a l l parts of the c i t y . 11 . Production and Consumption of Building Space The l i t e r a t u r e review i n Chapter II indicated that i t i s generally accepted; taxes on land do not a f f e c t the amourt of building space that i s produced or consumed. Taxes on im-provements however, are considered to have a depressing e f f e c t on the production of building space, and cause rents or prices of b u i l d i n g s to increase. Assuming that the views i n the proceeding paragraph 76 are correct, t h e decrease i n the tax on land i n the t r a n s i t i o n z o n e , and t h e increase i n the tax on land i n the other areas o f t h e c i t y as shown i n Table XII, w i l l not a'ffect the amount of b u i l d i n g space produced or consumed. The increase i n the tax o n t h e value of improvements i n the t r a n s i t i o n and the other areas of the c i t y however, w i l l decrease the amount of b u i l d i n g space produced and consumed. This analysis indicates that the practice of under assessing land value i n the trans-i t i o n zone has a depressing e f f e c t on the amount of b u i l d i n g space that i s produced and consumed. 12. Investment Decisions The e f f e c t s that r e a l estate property taxes are con-sidered to have on c e r t a i n types of investment decisions are described at some length i n Chapter II, and only a very b r i e f summary of the e f f e c t s are presented here. Investment i n r e a l estate property for purely speculative gains i s discouraged by taxes on land value. Investments i n the r e h a b i l i t a t i o n and maintenance of e x i s t i n g buildings i s encouraged by taxes on land value, and discouraged by taxes on the value of im-provements. Re-development of under u t i l i z e d land i s encour-aged by taxes on land value, and discouraged by taxes on im-provements . T a b l e X I I shows t h a t the under-assessrnent of land v a l u e i n t h e t r a n s i t i o n z o n e decreases the tax on land i n the t r a n s i t i o n z o n e , b u t increases t h e tax on the improvements i n t h e t r a n s i t i o n z o n e , a n d o n b o t h l a n d and improvements i n a l l o t h e r a r e a s ' - o-f t h e c i t y ; Assuming that t r i e statements In t h e 77 preceeding paragraph are v a l i d , i t follows therefore, that speculative investments w i l l be encouraged, and investment i n the r e h a b i l i t a t i o n of e x i s t i n g buildings as well as the redevelopment of under u t i l i z e d land w i l l be discouraged i n the t r a n s i t i o n zone. The increase i n the tax on land i n the areas of the c i t y outside of the t r a n s i t i o n zone w i l l discourage speculation and encourage r e h a b i l i t a t i o n and re-development. The concom-i t a n t increase i n the tax on improvements i n the areas outside the t r a n s i t i o n area, however, w i l l tend to discourage rehab-i l i t a t i o n and re-development. The net e f f e c t of these two counter-acting forces cannot be determined from the a v a i l a b l e information. 78 C H A P T E R IV FOOTNOTES 1. Keith G i l b e r t , Private Interview i n Regina, Saskatchewan, September, 1971. 2. Becker, Land and Building Taxes, p. 16; Frederick E. Case, Sanders, A. Kahn, and A l f r e d Schimmel, Real Estate Appraisal  and Investment, (New York: Ronald Press Company, 1963), p. 300; Richard T. Ely, and George S. Wehrivein, Land  Economics 2nd ed. (Madison Wise.: Un i v e r s i t y of Wisconsin Press, 1964), p. 120; Weimer and Hoyt, Real Estate, p. 176. 3. C i t y of Regina, F i n a n c i a l Statement. 1970, p.,84. 4. 50% of the estimated market value of $500 or $250 per front foot i s assumed, to provide uniformity of assessment between the t r a n s i t i o n zone and the developing subdivisions. 5. f f j f f i 04i 2670 X 1 0 0 0 = 1 0 9 - 1 5 5 3 m i l l s . In order to sim p l i f y c a l c u l a t i o n s a new m i l l rate of 109.16 m i l l s w i l l be used. I t should be noted that t h i s rounded m i l l rate w i l l a c t u a l l y produce more revenue than the 109.1553 m i l l rate, but the difference i s $1014, and does not s i g n i f i c a n t l y a l t e r any of the following c a l c u l a t i o n s . 6. The d e t a i l d e s c r i p t i o n i n Chapter II points out that there i s some disagreement as to the v a l i d i t y of these statements, but for purposes of analysis they are assumed to be v a l i d . 79 C H A P T E R V A CRITICAL EVALUATION OF THE STUDY 1. I n t r o d u c t i o n The p r e c e d i n g c h a p t e r s c o n t a i n a review o f the l i t -e r a t u r e r e l a t i n g t o r e a l e s t a t e p r o p e r t y t a x a t i o n , and a case study i n which the l a n d assessment p o l i c y f o r one s m a l l a r e a i n the C i t y o f Regina i s examined i n c o n s i d e r a b l e d e t a i l . T h i s f i n a l c hapter i s devoted to a c r i t i c a l examination o f a l l asp-e c t s o f the study. The degree to which the h y p o t h e s i s i s v e r -i f i e d and the e x t e n t t o which the o b j e c t i v e s o f the study a r e a c h i e v e d , a r e examined as one means o f e v a l u a t i n g the work. The study i s a l s o e v a l u a t e d i n terms o f i t s s i g n i f i c a n c e t o the p r a c t i c e o f community and r e g i o n a l p l a n n i n g , and any c o n t r i b u -t i o n t h a t i s made to the body o f t h e o r e t i c a l knowledge. 2. V e r i f i c a t i o n o f the Hypothesis The h y p o t h e s i s c o n s i s t s o f two r e l a t e d statements which express a r e l a t i o n s h i p between v a r i a b l e s . "Under assessment o f l a n d v a l u e i n the r e s i d e n t i a l -b u s i n e s s t r a n s i t i o n zone a d j a c e n t t o the c e n t r a l b u s i n e s s d i s t r i c t i n Regina r e l a t i v e t o the l a n d assessment p r a c t i c e i n more r e c e n t l y developed r e s i d e n t i a l s u b d i v i s i o n s r e s u l t s i n a r e d i s t r i b u t i o n o f the burden o f t a x a t i o n which i n f l u e n c e s 80 the d i s t r i b u t i o n of economic wealth, the a l l o c a t i o n of r e a l estate resources and development throughout the c i t y . " The f i r s t statement expresses a causal r e l a t i o n s h i p between the under assessment of land value i n the r e s i d e n t i a l -business t r a n s i t i o n zone and the r e - d i s t r i b u t i o n of the burden of taxation. The comparison of assessment r a t i o s f o r land i n the t r a n s i t i o n zone, with the assessment r a t i o s f o r land i n developing subdivisions i n Chapter IV, indicated that land i n the t r a n s i t i o n zone was assessed at a lower proportion of estimated market value i n 1970. Tables VII, VIII and IX de-monstrate that the under assessment of land i n the t r a n s i t i o n zone causes the burden of taxation to be s h i f t e d from the value of land i n the t r a n s i t i o n zone, to the value of improve-ments i n the t r a n s i t i o n zone, and to both land and improvements i n the other areas of the c i t y . This v e r i f i e s the f i r s t state-ment of the hypothesis. The second statement expresses a r e l a t i o n s h i p between the r e d i s t r i b u t i o n of the burden of taxation and the d i s t r i -bution of economic wealth, the a l l o c a t i o n of r e a l estate re-sources, and development throughout the c i t y . The analysis of the s h i f t s i n the burden of taxation i n Chapter IV establishes a t h e o r e t i c a l r e l a t i o n s h i p between the changes i n the d i s t r i -bution of taxes and the other variables, but because they are not substantiated with empirical evidence the second part of the hypothesis cannot be f u l l y v e r i f i e d . 81 3. Achievement of Objectives The two objectives of the study as stated i n Chapter I are, "to provide some insight into the complexity and f a r -reaching e f f e c t s that one r e a l estate taxation p o l i c y i s capable o f generating, and to demonstrate how e x i s t i n g economic and taxation theories can be employed to examine r e a l estate taxation p o l i c i e s for the purpose of evaluating t h e i r conse-quences . " The extensive r e d i s t r i b u t i o n of taxes due to under assessing land value i n the residential-business t r a n s i t i o n zone i n Regina that i s shown i n Tables VI through XII, i n d i -cates how the e f f e c t s of taxation p o l i c y i n one area of the c i t y or tax j u r i s d i c t i o n can be s h i f t e d to a l l parts of the c i t y . The analysis of the e f f e c t s that these s h i f t s i n the d i s t r i b u t i o n of taxes have on property values, the d i s t r i -bution of wealth, r e a l estate investment decisions and devel-opment, that i s described i n the l a t t e r portions of Chapter IV, indicates that the f i r s t objective has been achieved. The f a c t that the theories of r e a l estate taxation, economics, and public finance that are described i n Chapter II are used to analyse the consequences of the p o l i c y of under assessing land value i n the residential-business t r a n s i t i o n zone con-firms that the second objective of the study has been achieved. 4 . The Significance of the Study fo r Community and Regional Planning ' The manner i n which our physical resources, including 82 r e a l estate are used, and the way i n which our settlements develop to influence the q u a l i t y of human l i f e , i s of v i t a l i n t e r e s t to the practice of community and regional planning. Two objectives of community and regional planning are; to acquire a greater understanding of the forces that shape and d i r e c t the growth and development of our settlements; and to i d e n t i f y new tools that can be used to d i r e c t the development of our communities i n accordance with chosen community goals. The growth and development of c i t i e s and regions i s la r g e l y the r e s u l t of a multitude of private decisions that are based on the p r o f i t expectations of investments, and the choices of consumers based on the comparative costs and bene-f i t s of a l t e r n a t i v e types of housing. The l e v e l of services provided by l o c a l governments has increased considerably i n the l a s t h a l f century, and the r e a l estate property tax, which i s the major source of l o c a l government revenue, has increased proportionately. Real estate property taxes represent a cost to the investor which e f f e c t s the p r o f i t a b i l i t y of an invest-ment, and the tax i s a cost to the consumer of housing. I t therefore follows that taxes on r e a l estate property influence decisions involving the development and use of r e a l estate property, and are of some i n t e r e s t for community and regional planning. The review of l i t e r a t u r e i n Chapter II of t h i s study draws together a considerable amount of the a v a i l a b l e i n f o r -mation concerning the e f f e c t s that taxes on land and improve-83 merits have on the development and use of r e a l estate. The analysis of the consequences of a taxation p o l i c y i n one part of the C i t y of Regina i n Chapter IV, i n e f f e c t demonstrates how e x i s t i n g economic and taxation theories can be used to evaluate p a r t i c u l a r taxation p o l i c i e s . The information i n t h i s study provides a general understanding of r e a l estate property taxes, and a basic methodology which can be used to evaluate e x i s t i n g taxation p o l i c i e s . The methodology can also be used to formulate and evaluate new tax p o l i c i e s , to be used as p o s i t i v e implementation tools to d i r e c t growth and development i n predetermined ways. The study i s primarily concerned with the a p p l i c a t i o n of theory to a n a l y t i c a l problems and contributes l i t t l e to the body of t h e o r e t i c a l knowledge. 5. Limitations of the Study The study may be c r i t i c i z e d for attempting to cover too broad a subject and for not i n v e s t i g a t i n g the subject i n s u f f i c i e n t depth. I t would have been possible to examine only one aspect of the consequences of the under assessment p o l i c y , such as the e f f e c t s on the r e d i s t r i b u t i o n of wealth i n great d e t a i l . This would have involved c o l l e c t i n g information about the owners of property and tenants to determine i f the tax p o l i c y r e d i s t r i b u t e d wealth from higher to lower income groups, or the reverse. This narrow subject could have been examined i n very great d e t a i l and i f a number of other narrowly defined aspects of the tax p o l i c y were examined i n succeeding studies, a l l of t h e e f f e c t s of the taxation p o l i c y i n Regina would 84 eventually be known. The use of the broad overview approach provides a general understanding of the consequences of the po l i c y to demonstrate the methodology and provide an analyt-i c a l framework for future, i n depth analysis of each aspect of the polic y . The r e l i a b i l i t y of the study i s l i m i t e d by the small number of land sales that were av a i l a b l e to e s t a b l i s h estimates of market value. This problem was further aggravated by not knowing how representative was the sample of sales. The pro-blem of inadequate sales information can be overcome by em-ploying professional appraisers to estimate land market values, but t h i s would be very expensive i f a large number of properties are involved. The value of the study i s also l i m i t e d by the re-li a n c e on economic and taxation theories to evaluate the con-sequences of the assessment p o l i c y i n q u a l i t a t i v e terms. This was made necessary by the lack of d e t a i l data regarding the economics of development, r e a l estate investment decisions, and h i s t o r i c a l r e a l estate market a c t i v i t y i n Regina, that i s required to formulate a precise mathematical model that could produce a quantitative evaluation of the tax po l i c y conse-quences. Real estate markets probably are s u f f i c i e n t l y unique that a d i f f e r e n t model would be required to evaluate tax p o l i c i e s i n each c i t y . 6. Recommendations for Further Study In order to provide a quantitative analysis of. the;. 85 consequences of taxation p o l i c i e s , such as the one i n v e s t i -gated i n t h i s study, i t i s necessary to have a precise math-ematical model of the r e a l estate market. Quantitative ana-l y s i s i s required i f taxation p o l i c i e s are to be used, as precise implementation tools for community and regional plan-ning purposes, i n a sophisticated manner. A considerable amount of research i s required i n order to i d e n t i f y the s i g -n i f i c a n t v a riables, and formulate the p r e d i c t i v e quantitative models that are necessary i f r e a l estate property taxes are to be used as d e l i c a t e p o s i t i v e p o l i c i e s for development, rather than j u s t as a means of r a i s i n g revenue. There i s s t i l l a considerable amount of disagreement concerning the e f f e c t s of r e a l estate property taxes. This makes i t d i f f i c u l t to convince tax assessors that the system of taxation i n use, or c e r t a i n aspects of i t , has detrimental consequences and should be changed. More research i s required to e m p i r i c a l l y test the c o n f l i c t i n g theories and remove the causes of disagreement. 86 BIBLIOGRAPHY BOOKS Back, Kenneth, "Land Value Taxation i n Light of Current Assessment Theory and Pra c t i c e " , The Assessment of  L a n d Value. Edited by Daniel M. Holland, Madison, Wise.: University of Wisconsin Press, 1970. Barlowe, Raleigh, Land Resource Economics, Englewood C l i f f s , N.J.: Pr e n t i c e - H a l l , Inc. 1958. Becker, Arthur P., "Pr i n c i p l e s of Taxing Land and Buildings for Economic Development", Land and Building Taxes;  Their E f f e c t on Economic Development, Edited by Arthur P. Becker, Madison, Wis.: University of Wisconsin Press, 1969. Case, Frederick E., Real Estate, Boston: A l l y n and Bacon, Inc., 1956. Case, Frederick E.; Kahn, Sanders A.; and Schimmel, A. Al f r e d , Real Estate Appraisal and Investment, New York: Ronald Press Company, 1963. Crawford, K. Grant, Canadian Municipal Government, Toronto: Unive r s i t y of Toronto Press, 1954. Due, John F., Government Finance: Economics of the Public Sector, 4th ed. Homewood, 111.: Richard D. Irwin, Inc., 1968. Ely, Richard T. and Wehrwein, George S., Land Economics, 2nd ed. Madison, Wise.: University of Wisconsin Press, 1964.. Engelbert, Ernest A., "The P o l i t i c a l Aspects of Real Estate Taxation i n Relation to Metropolitan Growth and Planning", Land and Building Taxes: Their E f f e c t on  Economic Development, Edited by Arthur P. Becker, Madison W i s e : Univ e r s i t y of Wisconsin Press, 1969. Finnis, F.H., Real Property Assessment i n Canada. Toronto: Canadian Tax Foundation, 1962. Fisher, Ernest M. and Fisher, Robert M., Urban Real Estate, New York: Henry Holt fit Co., 1954. 87 Gaffney, Mason, "Adequacy of Land as a Tax Base", The Assessment of Land Value, E d i t e d by Da n i e l M. H o l l a n d , Madison, W i s e : U n i v e r s i t y of Wisconsin Press, 1970. G r e b l e r , Leo, Experience i n Urban Real E s t a t e Investment, New York: Columbia U n i v e r s i t y Press, 1955. H e i l o r u n , James, Real E s t a t e Taxes and Urban Housing, New York: Columbia U n i v e r s i t y Press, 1966. H e i l b r u n , James, "Reforming the Real E s t a t e Tax to Encourage Housing Maintenance and R e h a b i l i t a t i o n " , Land and  B u i l d i n g Taxes: Their E f f e c t on Economic Development, E d i t e d by A r t h u r P. Becker, Madison,Wisc.: U n i v e r s i t y of Wisconsin Press, 1969. Holl a n d , Daniel M., ed. The Assessment of Land Value, Madison, W i s e : U n i v e r s i t y of Wisconsin Pr e s s , 1970. Husband, W i l l i a m H. and Anderson, Frank R., Real E s t a t e , 3rd ed., Homewood, 111.: Richard D. I r w i n Inc., 1960. Inman, M.K., Economics i n a Canadian S e t t i n g , Toronto: Copp C l a r k P u b l i s h i n g Co. L t d . , 1959. Jensen, Jens P., Property Taxation i n the United S t a t e s , Chicago: U n i v e r s i t y of Chicago Press, 1931. L i t h w i c k , N. H. and Paquet, G i l l e s , "The Economics o f Urban Land Use", Urban S t u d i e s : A Canadian P e r s p e c t i v e , e d i t e d by N. H. L i t h w i c k and G i l e s Paquet, Toronto: Metheum P u b l i c a t i o n s , 1968. Lynn, Arthur D. J r . , ed. The Property Tax and I t s A d m i n i s t r a -t i o n , Madison, W i s e : U n i v e r s i t y of Wisconsin Press, 1969. McKay, A.N. and S l a t e r , D. W., "The Scope of Urban P o l i c y " , Urban S t u d i e s : A Canadian P e r s p e c t i v e , e d i t e d by N. H. L i t h w i c k and G i l e s Paquet, Toronto: Methuen P u b l i c a t i o n s , 1968. Marshal, A l f r e d , P r i n c i p l e s of Economics, 8th ed. London: Macmillan and Co., 1933. Morton, Walter, Housing Taxation, Madison, W i s e : U n i v e r s i t y of Wisconsin Press, 1955. Musgrave, Richard A.,The Theory of P u b l i c Finance, New York: McGraw-Hill, 1959. 8 8 Misgrave, R i c h a r d A. and Shoup, C a r l S., eds. Readings i n  the Economics o f T a x a t i o n , Homewood, 111.: R i c h a r d D . Irwin, Inc., 1959. Netzer, D . .Economics of the P r o p e r t y Tax, Washington, D.C: Brookings I n s t i t u t e , 1966. Netzer, D . , Economics and Urban Problems, New York: B a s i c B o o k s , Inc., 1970. Neutze, Max., "P r o p e r t y T a x a t i o n and M u l t i p l e F amily Hou5ing", Land and B u i l d i n g Taxes: T h e i r E f f e c t on  Economic Development, E d i t e d by A r t h u r P. Becker, Madison W i s e : U n i v e r s i t y o f W i s c o n s i n P r e s s , 1969. Pigou, A.C., A Study i n P u b l i c Finance, 4th ed. London: Ma c m i l l a n and Co., 1962. R a t c l i f f , R i c h a r d U., Real E s t a t e A n a l y s i s , New York: McGraw-Hill Book Company, 1961. R a t c l i f f , R i c h a r d U., Urban Land Economics, New York: McGraw-Hill Book Company, 1949. Rei d , Margaret G., Housing and Income, Chicago: U n i v e r s i t y o f Chicago P r e s s , 1962. Renne, Roland, Land Economics, New York: Harper and B r o t h e r s , 1947. Seligman, Edwin, The S h i f t i n g and I n c i d e n c e o f T a x a t i o n , 4th ed. New York: Columbia U n i v e r s i t y P r e s s , 1921. Shoup, C a r l S., P u b l i c Finance, Chicago: A l d i n e P u b l i s h i n g Company, 1969. Thompson, Wilbur R., A P r e f a c e to Urban Economics, B a l t i m o r e : John Hopkins P r e s s , 1965. Turvey, Ralph, The Economics of Real P r o p e r t y . London: George A l l e n and Uniwin L t d . , 1957. Watson, Donald Stevenson, P r i c e Theory and I t s Uses. Boston: Houghton M i f f l i n Company, 1963. Weimer, A r t h u r M. and Hoyt, Homer, Real E s t a t e , 5th ed. New York: Ronald Press Company, 1966. Wendt, F a u l F. and C e r f , A l a n R., Real E s t a t e Investment  A n a l y s i s and T a x a t i o n , New York: McGraw-Hill Book Company, 1969.. 89 Woodruff, A.M., "Assessment Standards: Highest and Best Use as a Basis for Land Appraisal and Assessment." The Property Tax and Its Administration, edited by Arthur D. Lynn, J r . , Madison Wise : University of Wisconsin Press, 1969. woodruff, A, M. and Ecker-Racz, L.L., "Property Taxes and Land-Use Patterns i n A u s t r a l i a and New Zealand." Land and Building Taxes: Their E f f e c t on Economic  Development, edited by Arthur P. Becker, Madison, W i s e : University of Wisconsin Press, 1969. REPORTS Beeman, William Joseph, The Property Tax and the S p a t i a l  Pattern of Growth Within Urban Areas, Research Monograph No. 16, Washington, D.C: Urban Land I n s t i t u t e , 1969. Bureau of Municipal Research, Market Value Reassessment: A Study of the Theory, The Practice and the Results, Toronto: Bureau of Municipal Research, 1970. Chapin, F. Stuart, J r . and Weiss, S h i r l e y F,, Factors  Influencing Land Development, Chapel H i l l , N.C.: Unive r s i t y of North Carolina, 1962. I n s t i t u t e of Urban Studies, The Texas Property Tax, Arlington,Texas: University of Texas, 1970. Rawson, Mary, Property Taxation and Urban Development. Research Monograph No. 4, Washington, D.C: Urban Land I n s t i t u t e , 1961. Wehrly, M.S. and McKeever, J.R., Urban Land Use and  Property Taxation, Technical B u l l e t i n No. 18, Washington, D.C: Urban Land I n s t i t u t e , May, 1952. PERIODICALS AND ARTICLES Amy, Henry J . , "Real Estate Taxes and Values", Appraisal  Journal. XVI, (July 1948), 360-8. Beecroft, E r i c , "Land", House and Home, (June 1962, 114-115. 90 Borries, Hans-Wilkin von, "Local Finance and Community Development", Journal of the American I n s t i t u t e of Planners, XXX (February 1964) 34-35. Gaffney, Mason, "Land Planning and the Property Tax," Journal of the American I n s t i t u t e of Planners, XXXV (May 1 9 6 9 ) 178-183. Gaffney, Mason, "Tax Induced Slow Turn Over of C a p i t a l " , American Journal of Economics and Sociology, XXIV (January 1970) 25-32. Harvey, Robert 0. and Clark, W.A.V., "The Nature and Economics of Urban Sprawl", Land Economics, XLI (February 1965) 1-9. Holden, Arthur C., "Taxation as a Factor i n Urban Redevelopment", Appraisal Journal, XV ( A p r i l 1947) 252-260. Rapkin, Chester, "Role of Real Estate Taxes i n New York Investment Experience of Real Property", Appraisal  Journal, XXII (October 1954) ; 486-496. Rountrey, J . Edward, "Equalization at Market Value", Appraisal Journal, XXIV ( A p r i l 1956) 213-222. Simon, Herbert A., "The Incidence of a Tax on Urban Real Property", Quarterly Journal of Economics, LVII No. 3 (May 1943) pp.398-420. Simpson, H.D., "The Incidence of Real Estate Taxes", American Economic Review, XXII (June 1932) 219-230. Stocker, Frederick D., "Effects of Taxation on Urban Land Use", Appraisal Journal. XXXIX (January 1971) 57-69. OTHER SOURCES Cit y of Regina Assessor's Department, "Assessment for Taxation - C i t y of Regina - 1969", Regina, 1969. (Typewritten). C i t y of Regina Comptroller's Department, C i t y of Regina Fi n a n c i a l Statement for the Year Ending December 31. 1 9 7 0 , A p r i l , 1971. 91 G i l b e r t , Keith, Private interview i n Regina, Saskatchewan, September, 1971, Regina, Saskatchewan, C i t y of Regina Zoning Bylaw, (1968). Saskatchewan, Urban Municipality Act, 1970, 18 E l i z . 2 , ch. 78. 

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