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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., U n i v e r s i t y o f Saskatchewan, 1966  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF Master o f A r t s i n the SCHOOL of COMMUNITY AND REGIONAL PLANNING  We a c c e p t t h i s t h e s i s as conforming required  to the  standard  THE UNIVERSITY OF BRITISH COLUMBIA May  1973  In p r e s e n t i n g  t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f the  requirements f o r an advanced degree a t the U n i v e r s i t y o f B r i t i s h Columbia, I agree t h a t the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r reference  and study.  I further  agree  t h a t p e r m i s s i o n f o r e x t e n s i v e copying o f t h i s t h e s i s f o r s c h o l a r l y purposes may be granted by the Head o f my S c h o o l or by h i s r e p r e s e n t a t i v e s .  I t i s understood t h a t  copying  or p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be allowed w i t h o u t my w r i t t e n  S c h o o l o f Community  permission.  and R e g i o n a l P l a n n i n g  The U n i v e r s i t y o f B r i t i s h Columbia Vancouver 8, Canada  Date  ii  ABSTRACT T h i s t h e s i s examines t h e g e n e r a l estate property  subject o f r e a l  t a x a t i o n and the s p e c i f i c problem o f e v a l -  u a t i n g the consequences o f c e r t a i n t a x a t i o n 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 o f 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 p l a c e d  on the c r i t i c i s m t h a t has been  d i r e c t e d a t t h e t a x on the b a s i s o f a d m i n i s t r a t i o n and the nature o f t h e tax.  The problem o f non-uniformity  o f tax-  a t i o n and i t s consequences i s examined i n g r e a t d e t a i l .  The  sources o f t h e problem and proposed remedies a r e reviewed and the methods o f a n a l y s i s a r e s u b j e c t e d The  to a c r i t i c a l analysis.  economic c h a r a c t e r i s t i c s o f r e a l e s t a t e prop-  e r t y taxes a r e a n a l y s e d ,  drawing p a r t i c u l a r a t t e n t i o n t o the  d i f f e r e n c e between t h e e f f e c t s o f a t a x on land and a t a x on improvements.  Taxes on land and improvements a r e e v a l u a t e d  i n terms o f t h e i r e f f e c t s on p r o p e r t y  values, rents, invest-  ment d e c i s i o n s and development. Land assessment p r a c t i c e s i n a 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  district i n  Regina a r e examined i n d e t a i l , r e l a t i n g t h e assessed t o estimated  market v a l u e s .  as percentages o f estimated  Assessed l a n d v a l u e s , market v a l u e  zone a r e compared t o assessed  land values  values  expressed  i n the t r a n s i t i o n i n developing  resi-  d e n t i a l s u b d i v i s i o n s a l s o expressed as a percentage o f the estimated  market v a l u e .  Land assessment r a t e s i n the t r a n s -  iii  i t i o n zone a r e a d j u s t e d  t o approximately the same percentage  of estimated market v a l u e developing  as the l a n d assessment r a t e s  i n the  s u b d i v i s i o n s and the e f f e c t o f t h i s change on the  d i s t r i b u t i o n o f taxes i s c a l c u l a t e d . The evaluated theories.  e f f e c t s o f the r e d i s t r i b u t i o n o f taxes i s  u s i n g economic and r e a l e s t a t e p r o p e r t y  taxation  The examination i s l i m i t e d t o a q u a l i t a t i v e ana-  l y s i s due t o t h e l a c k o f d a t a which prevents the f o r m u l a t i o n o f mathematical models t h a t a r e capable o f making q u a n t i t a t i v e predictions. In c o n c l u s i o n ,  a l t h o u g h the methods employed t o  a n a l y s e the under- assessment o f land do p r o v i d e the  i n one p a r t o f the c i t y  some i n d i c a t i o n o f the consequences o f the p o l i c y ,  i n a b i l i t y t o make q u a n t i t a t i v e judgements l i m i t s  a p p l i c a t i o n as p o l i c y implementation t o o l s .  their  iv  T A 3 L E OF CONTENTS Page Chapter  Chapter  I  A n I n t r o d u c t i o n T o The P r o b l e m and t h e Research Methodology 1. T h e P r o b l e m And I t s I m p o r t a n c e f o r Community and R e g i o n a l P l a n n i n g 2. Hypothesis 3. Research Methodology 4. Data C o l l e c t i o n and A n a l y s i s Methodology  II  Part  Part  I  II  Real E s t a t e Property Taxes: A General Description Introduction 1. Real Estate Property Taxation i n North America "'• 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 3. R e a l E s t a t e P r o p e r t y Taxes and Equity 4. N e u t r a l i t y o f Real Estate Property Taxes 5. Taxing B u i l d i n g Values 6. P r o p o s e d Remedy f o r t h e U n d e s i r a b l e Aspects o f R e a l E s t a t e P r o p e r t y Taxes 7. Non-uniformity o f Real Estate P r o p e r t y Taxes 8. Non-uniform Real E s t a t e P r o p e r t y Taxation Within Taxation Jurisdictions 9. Causes o f Non-uniform T a x a t i o n 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 Jurisdiction T h e E c o n o m i c N a t u r e , and C o n s e q u e n c e s of R e a l E s t a t e P r o p e r t y Taxes 1. The Economic D i s t i n c t i o n Between L a n d a n d Improvements 2. T a x e s o n L a n d a n d Improvements 3. The E f f e c t o f R e a l E s t a t e P r o p e r t y T a x e s o n R e n t s and P r i c e s 4. The E f f e c t o f R e a l E s t a t e P r o p e r t y T a x e s on P r o p e r t y V a l u e s 5. Who B e a r s t h e B u r d e n o f R e a l E s t a t e P r o p e r t y Taxes? 6. Real E s t a t e Property Taxes, I n v e s t m e n t D e c i s i o n s and U r b a n Development  1 3 4 6  10 11 12 12 13 14 14 16 \ 17 17  20  23 23 24 25 26 26  27  V  TABLE OF CONTENTS ( c o n t i n u e d ) Page 7. 8. 9. Chapter I I I  Chapter IV  Real E s t a t e P r o p e r t y Taxes and Speculation Real E s t a t e P r o p e r t y Taxes and the I n t e n s i t y o f Land Use 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 T a x a t i o n i n Regina: P o l i c y and P r a c t i c e 1. The P o l i c y 2. The Study A r e a 3. The P r a c t i c e o f A s s e s s i n g Land Value f o r T a x a t i o n i n the Study Area " 4. The S e l l i n g P r i c e o f Land i n the Study A r e a 5. The S e l l i n g P r i c e o f R e s i d e n t i a l Land i n D e v e l o p i n g S u b d i v i s i o n s 6. The Assessment o f R e s i d e n t i a l Land i n Developing Subdivisions 7. Assessed Land V a l u e s Expressed as a Percentage o f S a l e s P r i c e Non-Uniform Land Assessment and I t s Consequences 1. Introduction 2. U n i f o r m i t y o f Land Assessment W i t h 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 3. U n i f o r m i t y o f Land Assessment 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 R e l a t i v e t o D e v e l o p i n g Residential Subdivisions 4. Under A s s e s s e d Land V a l u e s , The Tax Base and the H i l l Rate 5. R e d i s t r i b u t i o n o f Taxes 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 6. R e d i s t r i b u t i o n o f Taxes Throughout the C i t y 7. The Consequences o f R e d i s t r i b u t i n g the Real E s t a t e P r o p e r t y Tax i n Regina 8. Property Values 9. Rents 10. The D i s t r i b u t i o n o f Wealth 11. P r o d u c t i o n and Consumption o f B u i l d i n g Space  28 30 32  38 40 42 45 46 49 50  54 54  56 59 61 66 72 72 73 74 75  vi  TABLE OF CONTENTS 12. Investment Chapter V  Bibliography  (continued)  Decisions  A C r i t i c a l E v a l u a t i o n o f the Study 1. Introduction 2. V e r i f i c a t i o n o f the H y p o t h e s i s 3. Achievement o f O b j e c t i v e s 4. The S i g n i f i c a n c e o f the Study f o r Community and R e g i o n a l Planning 5. L i m i t a t i o n s o f the Study 6. Recommendations f o r F u r t h e r Study  Page 76 79 79 81 81 83 84 86  vii  LIST OF TABLES Table 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 II.,.. 1970 Assessed Land V a l u e s i n the Residential-3usiness Transition Zone III Land S a l e s 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 IV Land S a l e s i n A l b e r t Park Subdivision V..., Land S a l e s i n G l e n c a i r n S u b d i v i s i o n VI A s s e s s e d Land V a l u e s i n the Residential-Business Transition Zone U s i n g a U n i f o r m Assessment Rate of'$250 per F r o n t Foot VII The D i s t r i b u t i o n o f Taxes W i t h i n the R e s i d e n t i a l - B u s i n e s s Zone U s i n g the 1970 Assessment Rates and M i l l Rate VIII The D i s t r i b u t i o n o f Taxes W i t h i n the Residential-Business Transition U s i n g a Uniform Assessment Rate o f $250 per F r o n t Foot IX ..Changes i n the D i s t r i b u t i o n o f Taxes W i t h 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 Due t o Under A s s e s s i n g Land i n the T r a n s i t i o n Zone X The D i s t r i b u t i o n o f Taxes Using the 1970 Assessment Rates and M i l l Rate XI .The D i s t r i b u t i o n o f Taxes Using a Uniform Land Assessment Rate o f $250 per F r o n t Foot i n the R e s i d e n t i a l B u s i n e s s Zone XII ...Changes i n the D i s t r i b u t i o n o f Taxes Due t o Under A s s e s s i n g Land 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  Page 40 43 47 48 49  60 62  63  64 68  69  70  viit  LIST OF FIGURES Page The L o c a t i o n o f the T r a n s i t i o n Zone  41  T a x a t i o n Areas  67  ACKNOWLEDGEMENT  I wish t o acknowledge the a s s i s t a n c e p r o v i d e d by P r o f e s s o r B. Wiesman, whose a d v i c e , encouragement and p a t i e n c e made the completion  of this thesis possible.  .1  C H A P T E R  AN  1,  I  INTRODUCTION TO THE PROBLEM AND THE RESEARCH METHODOLOGY  The Problem and I t s Importance F o r Community and R e g i o n a l Planning; A problem which i s found i n many North American  communities i s t h e somewhat haphazard manner i n which r e a l estate property  t a x a t i o n i s administered.  F o r t h e most p a r t  r e a l e s t a t e t a x a t i o n i s i n the hands o f assessment o f f i c e r s and  p o l i t i c i a n s whose o b j e c t i v e ; f o r a d m i n i s t e r i n g  t h e taxes  i s p r i m a r i l y t o r a i s e t h e r e q u i r e d revenue w i t h a minimum of p u b l i c o p p o s i t i o n .  1  The e f f e c t s t h a t t a x a t i o n  have on how r e a l e s t a t e r e s o u r c e s how  policies  a r e a l l o c a t e d o r used and  w e a l t h i s d i s t r i b u t e d a r e f o r t h e most p a r t i g n o r e d o r  relegated cases,  t o secondary p o s i t i o n s o f importance.  In other  c o n s c i o u s attempts t o make r e a l e s t a t e taxes e f f e c t -  i v e i n promoting p a r t i c u l a r development o b j e c t i v e s , o r t o r e l i e v e t h e burden o f t a x a t i o n on a p a r t i c u l a r c a t e g o r y o f property  owners, a l l t o o o f t e n f a i l  into consideration.  t o take secondary e f f e c t s  One example o f t h i s narrow approach t o  r e a l estate taxation i s the p o l i c y of assessing  l a n d on the  urban f r i n g e on t h e b a s i s o f the e x i s t i n g a g r i c u l t u r a l u s e , r a t h e r than market v a l u e  t o prevent e x c e s s i v e  T h i s p o l i c y has t h e u n d e s i r a b l e  subdivision.  consequence o f encouraging  s p e c u l a t i o n t h a t r e s u l t s i n r i s i n g land p r i c e s and unearned  2  c a p i t a l gains  f o r the s p e c u l a t o r s .  The  end  r e s u l t of  the  aforementioned p r a c t i c e s i s f r e q u e n t l y a s i t u a t i o n i n which many d i f f e r e n t r a t e s o f r e a l e s t a t e t a x a t i o n a r e 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 o f which f o r 3 the community as a whole a r e unknown. 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 t a x a t i o n r e v e a l s t h a t few  estate  attempts have been made t o form-  u l a t e an a n a l y t i c a l methodology t o e v a l u a t e  the  o f non-uniform r e a l e s t a t e t a x a t i o n p o l i c i e s .  consequences The  most  f r e q u e n t l y employed method i s t o assume t h a t u n i f o r m 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 o f a l l o c a t i o n and  from u n i f o r m i t y  economically  C r i t i c s o f t h i s approach m a i n t a i n t h a t i n  c e r t a i n instances  i t may  w e l l be a v a l i d method but t h a t i t  i s not u n i v e r s a l l y a p p l i c a b l e and t a x a t i o n should  resource  the e q u i t a b l e d i s t r i b u t i o n o f t a x burden,  thus making a l l d e v i a t i o n s undesirable.^  tax-  be e v a l u a t e d  i t s consequences w i t h r e g a r d  each i n s t a n c e o f non-uniform  on i t s own  merits,  t o determine  t o the d i s t r i b u t i o n o f  burden o f t a x a t i o n , w e a l t h and  the a l l o c a t i o n o f  the  resources.^  In summary, the problem t o be i n v e s t i g a t e d i s the existence  o f non-uniform r e a l e s t a t e t a x a t i o n p r a c t i c e s , the  e f f e c t s o f which a r e unknown, and methodology t o e v a l u a t e The  appropriate  them.  importance o f t h i s problem f o r community  r e g i o n a l planning planning  the l a c k o f an  and  emanates p r i m a r i l y from the c o n c e r n of  i n the manner i n which our p h y s i c a l r e s o u r c e s  are  3  used, how our communities develop and t h e manner i n which these f a c t o r s i n f l u e n c e t h e q u a l i t y o f human l i f e . ment o f a c i t y o r r e g i o n i s t o a l a r g e e x t e n t of a m u l t i t u d e  Develop-  the product  o f p r i v a t e investment d e c i s i o n s t h a t a r e made  on the b a s i s o f t h e p r o f i t motive and, as r e a l e s t a t e  taxes  a f f e c t the income p o t e n t i a l o f r e a l e s t a t e t h e y can i n f l u e n c e investment d e c i s i o n s and development.^  The importance o f t h e  problem i s emphasized by t h e f a c t t h a t most o f 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 w i t h r e a l e s t a t e i n some form and t h e r e f o r e t h e way t h a t r e a l e s t a t e i s developed o r used pot e n t i a l l y i n f l u e n c e s a l l o f t h e r e s i d e n t s o f a community i n both economic and s o c i a l terms.'' Examining t h e e f f e c t s o f r e a l e s t a t e t a x a t i o n  pract-  i c e s c a n be b e n e f i c i a l t o community and r e g i o n a l p l a n n i n g by c o n t r i b u t i n g toward a g r e a t e r u n d e r s t a n d i n g o f t h e f o r c e s which i n f l u e n c e development, and by s e r v i n g as a b a s i s f o r the f o r m u l a t i o n  o f t a x a t i o n p o l i c i e s t o be used f o r p o s i t i v e  c o n t r o l o f development. The  o b j e c t i v e o f t h e study i s f i r s t ,  i n s i g h t i n t o t h e complex and f a r r e a c h i n g  t o provide  some  e f f e c t s t h a t one  r e a l e s t a t e t a x a t i o n p o l i c y i s capable o f g e n e r a t i n g , and s e c o n d l y , t o demonstrate how e x i s t i n g economic and t a x a t i o n t h e o r i e s can be employed t o examine r e a l e s t a t e  taxation  p o l i c i e s f o r t h e purpose o f e v a l u a t i n g t h e i r consequences. 2.  Hypothesis 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 -  4  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 district  t o the c e n t r a l b u s i n e s s  i n Regina, r e l a t i v e t o t h e land 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 t h e burden o f t a x a t i o n which i n f l u e n c e s the d i s t r i b u t i o n o f economic wealth, the a l l o c a t i o n o f r e a l estate resources 3.  and development throughout t h e c i t y .  Research Methodology A comprehensive e x a m i n a t i o n o f r e a l e s t a t e  taxation  i n t h e C i t y o f Regina i s t o o complex a s u b j e c t t o be handled w i t h i n the scope o f t h i s t h e s i s . the focus  Realizing this  limitation,  o f the t h e s i s i s d i r e c t e d toward a n a l y z i n g  taxation policy.  The r e s e a r c h  o n l y one  methodology employed t o study  the e f f e c t s o f r e a l e s t a t e t a x a t i o n c o n s i s t s o f two r e l a t e d parts. and  First,  by means o f a l i t e r a t u r e review, t h e economic  administrative  c h a r a c t e r i s t i c s o f r e a l e s t a t e taxes and  r e l e v a n t economic t h e o r i e s a r e examined t o determine how the d i s t r i b u t i o n o f wealth a r e a f f e c t e d by taxes on l a n d and improvements.  Major t o p i c s which w i l l  be covered a r e , the  e f f e c t s t h a t r e a l e s t a t e taxes on land and improvements have on r e n t s , p r o p e r t y and  values,  r e a l e s t a t e investment  decisions  development. The  second p a r t o f the r e s e a r c h  c o n s i s t s o f a case  study examination o f the p r a c t i c e o f a s s e s s i n g  land v a l u e f o r  the purpose o f r e a l e s t a t e t a x a t i o n 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 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  of Regina, and an e v a l u a t i o n o f t h e consequences.  district  The r a t i o  5  of  assessed l a n d v a l u e t o estimated market 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, i s compared w i t h  the  r a t i o o f a s s e s s e d land v a l u e t o e s t i m a t e d market v a l u e i n two  r e c e n t l y developed  r e s i d e n t i a l a r e a s , t o determine  degree of u n i f o r m i t y o f t a x a t i o n .  the  The a s s e s s e d v a l u e o f  l a n d 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 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 a s s e s s e d a t the same p r o p o r t i o n o f e s t i m a t e d market v a l u e as l a n d i n r e c e n t l y developed culated. if  new  cal-  The assessed v a l u e o f l a n d i n the t r a n s i t i o n zone,  i t i s a s s e s s e d a t the same p r o p o r t i o n o f e s t i m a t e d market  v a l u e as r e c e n t l y developed to  r e s i d e n t i a l a r e a s i s then  c a l c u l a t e a new  r e s i d e n t i a l a r e a s , i s then used  tax base f o r the c i t y as a whole.  t a x base t o t a l i s then used  r a t e f o r the base year 1970  t o c a l c u l a t e a new  The  mill  and t h i s m i l l r a t e i s used  to  c a l c u l a t e the amount o f r e a l e s t a t e taxes t h a t p r o p e r t y ,  both  i n the t r a n s i t i o n zone and  the a r e a o u t s i d e , would be s u b j e c t  to  on the b a s i s o f the new  tax base.  of  a l l p r o p e r t y i s then compared w i t h the t a x l i a b i l i t y  1970,  The new  tax  liability in  under the e x i s t i n g l a n d v a l u e assessment p r a c t i c e s ,  determine  to  the changes i n the burden o f r e a l e s t a t e t a x a t i o n  t h a t r e s u l t when l a n d i n the t r a n s i t i o n zone i s a s s e s s e d a t the same p r o p o r t i o n o f e s t i m a t e d market v a l u e as l a n d i n r e c e n t l y developed  residential subdivisions.  The  changes  i n the burden o f r e a l e s t a t e t a x a t i o n are then a n a l y z e d  and  the e f f e c t s t h a t the changes have on r e n t s , p r o p e r t y v a l u e s ,  6  r e a l e s t a t e investment d e c i s i o n s and  development are  evaluated  by employing the c h a r a c t e r i s t i c s o f r e a l e s t a t e taxes mation and  infor-  r e l e v a n t economic t h e o r i e s t h a t are d e s c r i b e d  in  the l i t e r a t u r e review. The  s h i f t i n the burden o f t a x a t i o n t h a t r e s u l t s from  the change i n the p r a c t i c e o f a s s e s s i n g i n q u a n t i t a t i v e terms, but described  land value  i s described  the e f f e c t s o f the s h i f t a r e  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  a t i o n i s a v a i l a b l e a t the p r e s e n t  only  inform-  time t o f o r m u l a t e a p r e c i s e  mathematical model t h a t i s capable o f p r e d i c t i n g the magnitude o f the e f f e c t s . The  evidence p r e s e n t e d , r e g a r d i n g  burden o f t a x a t i o n and i s then e v a l u a t e d  the s h i f t i n the  the r e s u l t i n g e f f e c t s o f the  shift,  t o determine the degree to which the hypo-  t h e s i s can be v e r i f i e d .  A n a l y s i s o f the methodology employed  to examine the consequences o f non-uniform l a n d assessment p r a c t i c e s i s undertaken to e v a l u a t e  i t s a p p l i c a b i l i t y as  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 e s t a t e p r a c t i c e s and and  4.  taxation  f o r t e s t i n g proposed t a x a t i o n p o l i c i e s .  short-comings o f the methodology a r e then d e s c r i b e d  directions for future research  are  an  Defects and  proposed.  Data C o l l e c t i o n and A n a l y s i s Methodology The  volves  f i r s t stage o f d a t a c o l l e c t i o n and  an examination of l a n d s a l e s i n f o r m a t i o n  veloping  r e s i d e n t i a l s u b d i v i s i o n s and  t r a n s i t i o n zone.  analysis i n f o r two  de-  the r e s i d e n t i a l - b u s i n e s s  Records o f land s a l e s which are  maintained  7  by t h e C i t y A s s e s s o r ' s department p r o v i d e t h e b a s i s f o r e s t i m a t i n g t h e market v a l u e o f l a n d i n both t h e d e v e l o p i n g r e s i d e n t i a l s u b d i v i s i o n s and t h e t r a n s i t i o n zone.  The mean  s a l e p r i c e f o r l a n d i n each o f these t h r e e areas i s c a l c u l a t e d and used as an e s t i m a t e o f market v a l u e .  The a s s e s s e d  v a l u e o f l a n d i n t h e two r e s i d e n t i a l s u b d i v i s i o n s i s a v a i l a b l e from l a n d assessment maps i n t h e C i t y A s s e s s o r ' s d e p a r t ment, s i n c e t h e l a n d assessment i s c o n s t a n t throughout subdivision.  each  The assessed v a l u e o f l a n d i n each s u b d i v i s i o n  i s then expressed as a percentage  o f e s t i m a t e d market v a l u e .  The a s s e s s e d v a l u e o f l a n d i n t h e 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 v a r i e s a c c o r d i n g t o t h e use o f t h e l a n d , so a d e t a i l e d examination t o determine  o f t h e assessment r o l l i s r e q u i r e d  t h e a s s e s s e d v a l u e o f l a n d f o r each use.  The  a s s e s s e d v a l u e o f l a n d f o r each type o f u s e i s expressed as a percentage  o f t h e e s t i m a t e d market v a l u e f o r t h e purpose  o f comparing l a n d assessment i n t h e t r a n s i t i o n zone t o t h a t i n the r e s i d e n t i a l subdivisions. The a s s e s s e d v a l u e o f a l l t h e l a n d i n t h e 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 i s then changed so t h a t i t bears approximately  t h e same r e l a t i o n s h i p t o t h e e s t i m a t e d market  v a l u e as a s s e s s e d v a l u e does t o e s t i m a t e d market v a l u e i n t h e residential subdivisions.  The e f f e c t t h a t t h i s change i n  a s s e s s i n g land v a l u e has on t h e t a x a t i o n m i l l r a t e i s then c a l c u l a t e d by d i v i d i n g t h e 1970 g r o s s revenue from p r o p e r t y t a x a t i o n , i n c l u d i n g the b u s i n e s s tax, by t h e a d j u s t e d 1970  8  t a x a b l e p r o p e r t y assessment.' The  new  m u l t i p l i e d by the a d j u s t e d assessed  1970  m i l l r a t e i s then  v a l u e s o f p r o p e r t y 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 t o determine the l i a b i l i t y under the reassessment p o l i c y .  The  new  i s a l s o m u l t i p l i e d by the t o t a l t a x a b l e assessed  tax  m i l l rate value of a l l  r e a l e s t a t e p r o p e r t y o u t s i d e o f the t r a n s i t i o n zone and  the  business  for  tax assessment, t o determine the tax l i a b i l i t y  t h i s p r o p e r t y f o l l o w i n g reassessment. The and  tax burden on land and  improvements both w i t h i n  o u t s i d e o f the t r a n s i t i o n zone and  the business  tax  assess  rcent b e f o r e reassessment, i s compared w i t h the tax burden a f t e r reassessment, t o determine how is  the burden o f t a x a t i o n  s h i f t e d by a s s e s s i n g land v a l u e i n the t r a n s i t i o n zone  a c c o r d i n g t o the e x i s t i n g p o l i c y r a t h e r than the r e a s s e s s ment p o l i c y . The  e f f e c t s t h a t the s h i f t s i n tax burden have on  r e n t s , p r o p e r t y v a l u e s , r e a l e s t a t e investment and  decisions,  development, are then e v a l u a t e d by r e l a t i n g the changes  i n tax burden t o the t h e o r i e s presented review  i n the  literature  r e g a r d i n g the consequences o f r e a l e s t a t e tax  l a n d and  improvements.  on  9  C H A P T E R  I  FOOTNOTES 1.  E r n e s t A. E n g l e b e r t , "The P o l i t i c a l A s p e c t s o f R e a l E s t a t e T a x a t i o n i n R e l a t i o n t o M e t r o p o l i t a n Growth and P l a n n i n g " , i n 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, ed. by A r t h u r P. Becker (Madison Wise: 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), p. 112.  2.  R a l p h Turvey, The Economics o f Real P r o p e r t y . (London: George A l l e n and Unwin L t d . , 1957), p. 73.  3.  Kenneth Back, "Land V a l u e T a x a t i o n i n L i g h t o f C u r r e n t Assessment Theory and P r a c t i c e " , i n The Assessment o f Land V a l u e , ed. by D a n i e l M. Holland*"! (Madison Wise.": 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 , 1970), p. 47? E r n e s t M. F i s h e r and Robert M. F i s h e r , Urban Real E s t a t e , (New York: Henry H o l t & Co., 1954), p. 457; Mason G a f f n e y , "Adequacy o f Land as a Tax Base", i n The Assessment o f Land V a l u e s , ed. by D a n i e l M. H o l l a n d (Madison, Wise.: 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 , 1970), p. 172; A.N. McKay and D. W. S l a t e r , "The Scope o f Urban P o l i c y " , i n Urban S t u d i e s : A Canadian P e r s p e c t i v e , ed. by N. H. L i t h w i e k and G i l l e s Paquet, (Toronto: Methuen P u b l i c a t i o n s , 1968), p. 220.  4.  R a l e i g h Barlowe, Land Resource Economics, (Englewood N.J.i P r e n t i c e - H a l l , Inc., 1958), p. 558.  5.  W i l l i a m Joseph Beeman, The P r o p e r t y Tax and S p a t i a l P a t t e r n o f Growth W i t h i n Urban Areas, (Washington. D.C.J Urban Land I n s t i t u t e , 1969), p. 10.  6.  R i c h a r d U. R a t c l i f f , R e a l E s t a t e A n a l y s i s , (New York: McGraw H i l l Book Company, 1961), p. 10.  7.  Barlowe, Land Resource Economics, p. 1; F i s h e r and F i s h e r , Urban R e a l E s t a t e , p. 4; R a t c l i f f , Real E s t a t e - A n a l y s i s , p. 10; A r t h u r M. Weimer and Homer Hoyt, R e a l E s t a t e , (5th ed., New York: Ronald Press Company, 1966), p. 3.  Cliffs,  10  II  C H A P T E R REAL ESTATE PROPERTY TAXES;  A GENERAL DESCRIPTION  Introduction The  information  t h a t i s presented i n t h i s c h a p t e r i s  l a r g e l y the product o f 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 estate property  taxation.  t i o n of r e a l estate property  I t includes a general  descrip-  t a x a t i o n as i t e x i s t s i n North  America and a b r i e f examination o f t h e c r i t i c i s m s t h a t have been d i r e c t e d a t the t a x . The remaining p o r t i o n o f the chapt e r i s devoted t o a d e t a i l e d d e s c r i p t i o n o f t h e economic c h a r a c t e r i s t i c s o f r e a l estate property t h a t they have on r e n t s , p r o p e r t y  taxes and t h e e f f e c t s  values,  the d i s t r i b u t i o n of  w e a l t h , r e a l e s t a t e investment d e c i s i o n s and urban development . The  information  i n t h i s chapter i s intended  as t h e t h e o r e t i c a l b a s i s f o r e v a l u a t i n g r e a l estate property  t o serve  the consequences o f  t a x a t i o n p r a c t i c e s 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 i n Regina i n the f o l l o w i n g  chapters.  11  PART 1.  I  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 i n North America Real e s t a t e p r o p e r t y taxes i n North America a r e ,  a rule,  l e v i e d on both l a n d and  improvements.  A  as  separate  a s s e s s e d v a l u e i s p l a c e d on the l a n d and the improvements, and a u n i f o r m tax, or m i l l r a t e , i s a p p l i e d t o the v a l u e to c a l c u l a t e the amount o f tax l i a b i l i t y . ^ " equal t o one-tenth  of a cent.  assessed A mill is  The m i l l r a t e i s c a l c u l a t e d  d i v i d i n g the amount o f r e q u i r e d revenue by the a s s e s s e d of  t a x a b l e p r o p e r t y and  i s expressed  by  value  as m i l l s o f t a x per  2 thousand d o l l a r s o f assessed v a l u e .  The r e a l e s t a t e p r o p e r t y  t a x m i l l r a t e t r a d i t i o n a l l y serves as a mechanism f o r b a l a n c i n g l o c a l government budgets i n t h a t the r a t e i s s e t t o b r i d g e 3 gap  between e x p e n d i t u r e s and revenue from o t h e r  the  sources.  P r o p e r t y t a x a t i o n , mainly on r e a l e s t a t e , i s the major source o f revenue f o r l o c a l governments i n both Canada and United States.  Approximately  the  f o r t y - f i v e per cent o f s t a t e and  l o c a l government t a x revenue i s provided by p r o p e r t y t a x a t i o n 4 i n the U n i t e d S t a t e s .  A s i m i l a r s i t u a t i o n i s found  as a whole, where, i n 1963,  i n Canada  p r o p e r t y tax revenue made up  seven per cent o f a l l l o c a l government e x p e n d i t u r e s . ^  forty-  The  importance o f p r o p e r t y t a x a t i o n i n l o c a l p u b l i c f i n a n c e s i s even more pronounced i n Regina,  where, i n 1970,  the revenue  from r e a l e s t a t e p r o p e r t y taxes amounted to 71.1% of  Regina's t o t a l revenue.^  o f the  city  D e l e t i n g the p o r t i o n o f the t a x  t h a t the c i t y c o l l e c t s f o r the p u b l i c and) seperate- s c h o o l  12  boards reduces the revenue from r e a l e s t a t e p r o p e r t y o n l y 54,3%  of t o t a l expenditures,  excluding  public  taxes to education,  which i s somewhat more comparable w i t h the n a t i o n a l average. 2.  C r i t i c i s m o f Real  Estate Property  Taxes  In s p i t e o f the f a c t t h a t the r e a l e s t a t e t a x continues  t o produce a s i g n i f i c a n t p r o p o r t i o n o f  government revenues, i t i s p r o b a b l y cism than any  other  s i n g l e tax.  taxes can be d i v i d e d i n t o two One  property local  the t a r g e t o f more c r i t i -  C r i t i c i s m of r e a l  property  groups.  source o f 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 o f the tax, i n t h a t i t i s a p p l i e d t o both l a n d and  improvement, and  forms o f wealth.  not t o o t h e r  The  other  factors of production  cause o f c r i t i c i s m i s the  or frequent  l a c k o f u n i f o r m i t y , both 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 and 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  source o f c r i t i c i s m i s the s u b j e c t which w i l l be  be-  latter  extensively  examined i n t h i s work. 3.  Real E s t a t e P r o p e r t y Taxes and The  o f a tax a r e  two  Equity  most common t e s t s f o r e v a l u a t i n g the  " b e n e f i t s r e c e i v e d " and  equity  " a b i l i t y to pay".^  The  " b e n e f i t s r e c e i v e d " t e s t o f e q u i t y i s based on the premise t h a t a tax i s e q u i t a b l e i f the tax i s l e v i e d to the b e n e f i t s r e c e i v e d from the expenditure  i n proportion o f the revenue.  E m p i r i c a l s t u d i e s i n d i c a t e t h a t there i s a poor r e l a t i o n s h i p between r e a l e s t a t e p r o p e r t y  taxes and  the b e n e f i t s r e c e i v e d . ^  13  Netzer p o i n t s out t h a t t h e r e i s a tendency f o r g r e a t e r proportions of property  tax revenue t o be spent on  services l i k e education,  people-related  h e a l t h and w e l f a r e which have  i n f l u e n c e on the v a l u e o f p r o p e r t y ,  little  e s p e c i a l l y the b u i l d i n g  9  p a r t of r e a l The  estate. " a b i l i t y t o pay"  t e s t o f e q u i t y i s based on  b e l i e f t h a t a tax i s e q u i t a b l e i f i t i s p r o p o r t i o n a l t o w e a l t h o f the i n d i v i d u a l who  pays the tax.  Employing  c r i t e r i a f o r e q u i t y means t h a t r e a l e s t a t e p r o p e r t y be e q u i t a b l e i f the v a l u e o f r e a l p r o p e r t y t o t a l wealth.  The  the the  this  taxes w i l l  r e f l e c t s the owner's  v a l u e o f r e a l e s t a t e owned i s no l o n g e r  s i d e r e d t o be a good i n d i c a t i o n o f wealth, s i n c e wealth be h e l d i n many i n t a n g i b l e f o r m s . ^ that r e a l estate property  con-  can  Empirical studies indicate  taxes on r e s i d e n t i a l p r o p e r t y  are  r e g r e s s i v e because low-income groups spend a l a r g e p r o p o r t i o n o f t h e i r income f o r housing.** property  Studies  of non-residential  income a l s o r e v e a l e d a r e g r e s s i v e 12 s h i p between taxes and c u r r e n t income.  4.  taxes and  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 Real estate property  for  relation-  Taxes  taxes are f r e q u e n t l y  criticised  f a i l i n g t o meet the c r i t e r i a o f economic n e u t r a l i t y .  Eco-  nomic n e u t r a l i t y r e q u i r e s t h a t a tax not i n f l u e n c e the d e c i s i o n s 13 g o v e r n i n g the a l l o c a t i o n o f r e s o u r c e s . property  tax does not a p p l y  The  real  estate  to a l l of the f a c t o r s o f produc-  t i o n , t h e r e f o r e i t i n c r e a s e s the c o s t o f r e a l e s t a t e s e r v i c e s r e l a t i v e to the o t h e r  factors*, and  a firm* desirous; o f opt 1-  14  mizing and  production  e f f i c i e n c y w i l l use l e s s r e a l e s t a t e  s u b s t i t u t e other  Real estate property  factors o f production  such as  input  labour. ^ 1  taxes a l s o i n f l u e n c e the consumption  d e c i s i o n s o f households, s i n c e t h e t a x i n f l u e n c e s housing c o s t s , b u t not food and c l o t h i n g . to optimize  The household a t t e m p t i n g  consumption e x p e n d i t u r e s w i l l reduce t h e q u a n t i t y  o f h o u s i n g purchased and i n c r e a s e consumption o f o t h e r 15 i . e . c l o t h i n g and food. 5.  items,  Taxing B u i l d i n g Values The  p r a c t i c e o f levying r e a l estate property  on the v a l u e o f b u i l d i n g s has been s u b j e c t t o a amount o f c r i t i c i s m .  taxes  considerable  The charges brought a g a i n s t taxes t h a t  a r e l e v i e d on b u i l d i n g s i n c l u d e i n c r e a s i n g c o s t s o f l a n d and b u i l d i n g space, encouraging the d e t e r i o r a t i o n o f e x i s t i n g structures, discouraging  c o n s t r u c t i o n o f new s t r u c t u r e s , and  c o n t r i b u t i n g t o urban s p r a w l . ^ 1  The c r i t i c s go on a step  f u r t h e r , and conclude t h a t t a x i n g the v a l u e o f b u i l d i n g s i s a c o n t r i b u t i n g f a c t o r i n the c r e a t i o n o f many o f our urban problems, such as slums, i n e f f i c i e n t development r i s i n g costs o f municipal 6.  patterns,  s e r v i c e s , and t h e s h o r t a g e o f h o u s i n g .  Proposed Remedy f o r the U n d e s i r a b l e P r o p e r t y Taxes  Aspects o f Real  Estate  A method t o a l l e v i a t e t h e d e f i c i e n c i e s o f t h e conv e n t i o n a l r e a l estate property  t a x which i s f r e q u e n t l y o f f e r e d  as a s o l u t i o n by c r i t i c s o f t h e tax,  i s t o stop t a x i n g  buildings  15  and  to assess land value  purposes. ^  a t i t s f u l l market v a l u e  Netzer o f f e r s one  1  for taxation  o f the most comprehensive  and  18  succinct evaluations cally,  o f t h i s p o l i c y and  the arguments i n favour  i t s effects.  o f t a x i n g land v a l u e a l o n e  t h a t such a tax i s more e q u i t a b l e , e c o n o m i c a l l y encouraging t o development o f l a n d r e s o u r c e s b e s t use.  The  neutral,  are, and  t o the h i g h e s t  e q u i t y o f t a x i n g land v a l u e a l o n e i s based  the premise t h a t most o f the v a l u e  unearned i n c r e m e n t a l  value  and  on  o f l a n d r e s u l t s from p u b l i c  investment r a t h e r than the owner's e f f o r t s , and  '  Basi-  taxing  this  i s more e q u i t a b l e than t a x i n g  buildings. The  greater  economic n e u t r a l i t y and  development o f land t o i t s h i g h e s t and  encouragement f o r  b e s t use  that i s a t t r i -  buted t o t a x i n g l a n d v a l u e a l o n e r e s u l t s from the f a c t  that  under t h i s form o f t a x a t i o n the tax burden i s independent o f use.  No use  i s g i v e n an economic advantage, and  encouraged t o develop l a n d t o i t s h i g h e s t and order per  owners a r e  b e s t use  in  f  t o reduce the tax l i a b i l i t y per d o l l a r o f revenue or  cent o f r e a l e s t a t e s e r v i c e . Opponents o f t a x i n g land v a l u e a l o n e m a i n t a i n t h a t  the p o l i c y would r e s u l t i n s e v e r e economic d i s l o c a t i o n s . value  of land alone i s considered  base and excessive  t o be an inadequate  The  tax  p l a c i n g the e n t i r e tax burden on l a n d would encourage development o f some l a n d w h i l e p r o p e r t y  areas would be abandoned.  i n other  16  7.  Non  Uniformity  o f Real  Estate Property  Taxes  C r i t i c i s m o f the a d m i n i s t r a t i o n o f r e a l property  t a x a t i o n focuses  w i t h i n and  estate  on non u n i f o r m i t y o f taxes both  between t a x a t i o n j u r i s d i c t i o n s .  The  problems  a s s o c i a t e d w i t h t a x a t i o n d i f f e r e n t i a l s between t a x a t i o n dictions,  have r e c e i v e d a c o n s i d e r a b l e amount o f a t t e n t i o n i n  r e c e n t years  and w i l l o n l y be b r i e f l y c o n s i d e r e d  most r e c e n t and concentrated due  juri-  here.  The  comprehensive examinations o f the problem have  on the consequences f o r the l o c a t i o n o f a c t i v i t i e s  t o the v a r y i n g r a t e s o f r e a l e s t a t e p r o p e r t y  taxation that  19 are found i n a d j a c e n t observation property  taxation jurisdictions.  i s t h a t the l a c k o f u n i f o r m i t y o f r e a l  taxes between t a x a t i o n j u r i s d i c t i o n s  locational  The  estate  influences  d e c i s i o n s o f home owners, r e n t e r s and  enterprises, resulting  general  the  business  i n a sub-optimal d i s t r i b u t i o n  of land  20 uses.  One  o f the most f r e q u e n t l y c i t e d o b s e r v a t i o n s  the r e l a t i v e l y h i g h r a t e s o f r e a l e s t a t e p r o p e r t y c e n t r a l c i t i e s encourages development on the p e r i p h e r y and  i s that  taxation i n  metropolitan  d e t e r s renewal o f the o l d e r p a r t s o f t h e  central:;  21 city.  Thus, d i f f e r e n t i a l r e a l e s t a t e p r o p e r t y  taxes w i t h i n  urban areas a r e h e l d t o be c o n t r i b u t i n g t o the " f l i g h t t o suburbs" phenomenon as consumers o f housing and p r i s e s attempt t o escape h i g h t a x a t i o n l e v e l s , c i t i e s to continue c o s t s and  eroding  business  the enter-  leaving central  on the downward f i n a n c i a l s p i r a l o f r i s i n g tax bases.  17  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 Taxation J u r i s d i c t i o n s The a d m i n i s t r a t i o n o f r e a l e s t a t e p r o p e r t y taxes i n  North America  i s frequently c r i t i c i z e d  mity 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 .  f o ra lack of unifor-  Netzer p r o v i d e s one o f  the most d e t a i l e d and comprehensive a n a l y s e s o f t h e problem o f n o n - u n i f o r m i t y , i n c l u d i n g the causes o f t h e 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 o f non-  uniform taxation.  One v a r i e t y i s when s i m i l a r  properties,  such as s i n g l e f a m i l y houses a r e a s s e s s e d a t d i f f e r e n t a s s e s s 23 ment r a t i o s w i t h i n the same t a x a t i o n j u r i s d i c t i o n .  The  o t h e r k i n d o f n o n - u n i f o r m i t y occurs when d i f f e r e n t types o f p r o p e r t y , such as apartment b u i l d i n g s and s i n g l e f a m i l y houses a r e a s s e s s e d a t d i f f e r e n t assessment r a t i o s w i t h i n t h e same taxation 9.  jurisdiction.  Causes o f Non-uniform T a x a t i o n Non-uniform t a x a t i o n w i t h i n t a x j u r i s d i c t i o n s due t o  v a r i a t i o n s i n assessment r a t i o s can be a t t r i b u t e d t o many different factors.  Non-uniform t a x a t i o n can o c c u r when t h e  owners o f c e r t a i n types o f p r o p e r t y , o r the owners o f p r o p e r t y i n a p a r t i c u l a r area o f the tax j u r i s d i c t i o n ,  l a u n c h an e f f e c -  t i v e appeal a g a i n s t the a s s e s s e d v a l u e t h a t t h e a s s e s s o r p l a c e s on t h e i r p r o p e r t y and succeed  i n h a v i n g i t r e v i s e d by a t a x -  a t i o n appeal board w h i l e o t h e r p r o p e r t y owners a c c e p t the assessment o f t h e i r p r o p e r t y w i t h o u t p r o t e s t . 2 4  T h i s type o f  a c t i o n f r e q u e n t l y r e s u l t s i n r e l a t i v e under assessment o f  18  p r o p e r t y i n o l d d e t e r i o r a t i n g areas where p r o p e r t y owners use the d e c l i n e o f the a r e a as an argument f o r r e d u c i n g assessment rates. Non-uniform t a x a t i o n may  a l s o be the r e s u l t o f a consc-  ious e f f o r t on the p a r t o f p o l i t i c i a n s or a d m i n i s t r a t o r s t o under assess c e r t a i n types o f p r o p e r t y f o r purposes  of tax-  a t i o n t o a v o i d o p p o s i t i o n through t a x a p p e a l s , 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 o f taxpayers who  are  25 s e n s i t i v e to t a x r a t e s *  The owners o f s i n g l e f a m i l y d w e l l i n g  u n i t s a r e f r e q u e n t l y the b e n e f i c i a r i e s o f t h i s assessment p r a c t i c e s i n c e they see the tax on t h e i r p r o p e r t y as a d i r e c t housing c o s t , whereas the owners o f commercial  and  apartment  p r o p e r t i e s are a b l e t o pass on p a r t or a l l o f any t a x i n c r e a s e t o tenants or customers by r a i s i n g r e n t s or p r i c e s and  are  t h e r e f o r e l e s s l i k e l y t o oppose t a x i n c r e a s e s . Non-uniform t a x a t i o n may  a l s o be the r e s u l t o f  attempts  t o d i s t r i b u t e the burden o f t a x a t i o n i n a c l o s e r r e l a t i o n s h i p 27 t o the b e n e f i t s r e c e i v e d .  The e x p e n d i t u r e o f revenue from  r e a l e s t a t e p r o p e r t y taxes f o r s o c i a l programmes such as r e c r e a t i o n , e d u c a t i o n and w e l f a r e a i d tend t o produce  benefits  t h a t a r e more d i r e c t l y r e l a t e d t o i n d i v i d u a l s than r e a l perty.  pro-  The market v a l u e per r e s i d e n t o f apartment b u i l d i n g s  tends t o be lower than o t h e r forms o f housing so t h a t , i f r e s i d e n t i a l p r o p e r t y o f a l l types i s assessed a t a u n i f o r m p r o p o r t i o n o f market v a l u e , r e a l e s t a t e taxes on yield  apartments  l e s s revenue per r e s i d e n t than other types of h o u s i n g .  19  In o r d e r t o e q u a l i z e t a x revenue per c a p i t a , apartment b u i l d i n g s are assessed a t a h i g h e r p r o p o r t i o n o f market v a l u e than  other  forms o f housing which r e s u l t s i n non-uniform t a x a t i o n i n terms of the t a x as a percentage  o f market v a l u e .  The q u a l i t y and q u a n t i t y o f the s t a f f r e s p o n s i b l e f o r a s s e s s i n g r e a l e s t a t e p r o p e r t y can be a s i g n i f i c a n t f a c t o r i n the under o r over assessment o f c e r t a i n groups o r types o f 28 property.  Manpower d e f i c i e n c i e s i n terms o f numbers o r  a b i l i t y does n o t u s u a l l y prevent  s i n g l e f a m i l y houses from  b e i n g u n i f o r m l y assessed because they a r e r e l a t i v e l y simple t o evaluate, but non-uniformity  o f assessments can f r e q u e n t l y  occur among o t h e r types o f p r o p e r t y o r between s i n g l e f a m i l y houses and the o t h e r types o f p r o p e r t y . The a v a i l a b i l i t y o f p r o p e r t y s a l e s d a t a i s an import a n t p r e r e q u i s i t e f o r e s t a b l i s h i n g and m a i n t a i n i n g the u n i 29 formity of r e a l estate taxation.  In new s i n g l e f a m i l y  r e s i d e n t i a l areas t h e r e a r e u s u a l l y a l a r g e number o f r e c e n t s a l e s and the p r o p e r t i e s a r e s u f f i c i e n t l y s i m i l a r so t h a t i t i s r e l a t i v e l y easy t o produce u n i f o r m assessments w i t h i n t h e area.  P r o p e r t y i n o l d e r areas however, e x h i b i t s a g r e a t e r de-  gree o f d i v e r s i t y , and p r o p e r t y s a l e s a r e much l e s s so t h a t i t i s much more d i f f i c u l t  t o produce u n i f o r m  frequent assess-  ments i n o l d areas than new s i n g l e f a m i l y a r e a s . M u n i c i p a l a s s e s s o r s tend t o use the p r e s e n t use o f the s i t e as the b a s i s f o r e s t i m a t i n g l a n d v a l u e when p r o p e r t y 30  s a l e s i n f o r m a t i o n i s inadequate.  This practice u s u a l l y  20  results  i n under a s s e s s i n g l a n d t h a t i s under u t i l i z e d .  especially  It is  apparent i n t r a n s i t i o n a l zones and o l d s i n g l e  family  r e s i d e n t i a l areas t h a t a r e changing t o apartment o r commercial uses, o r where a g r i c u l t u r a l uses a r e g i v i n g way t o urban 31 functions.  Under assessment o f l a n d i n t r a n s i t i o n a l areas  may a l s o r e s u l t from i n f r e q u e n t reassessments s i n c e t h e v a l u e o f land i n such a r e a s tends t o a p p r e c i a t e r e l a t i v e t o l a n d i n 32 the r e s t o f t h e t a x j u r i s d i c t i o n . 10.  The B a s i s f o r C r i t i c i z i n g Non-uniform Real 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 The  uniform  Estate  most f r e q u e n t l y g i v e n reasons f o r c r i t i c i z i n g non-  r e a l estate taxation are that i t results  i n an i n e q u i t -  a b l 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 and i t causes r e sources t o be m i s a l l o c a t e d . The  charge t h a t non-uniform r e a l e s t a t e taxes a r e  i n e q u i t a b l e i s v a l i d i f the t a x i s c o n s i d e r e d  t o be e q u i t a b l e  when i t i s p r o p o r t i o n a l t o the v a l u e o f the taxed but when o t h e r d e f i n i t i o n s  property,  o f e q u i t y a r e used, u n i f o r m i t y o f  t a x a t i o n may i n c r e a s e o r d e c r e a s e t h e e q u i t y o f t h e t a x . The  commonly accepted  standards f o r e v a l u a t i n g the  e q u i t y o f a t a x a r e " b e n e f i t s r e c e i v e d " and " a b i l i t y t o pay." The  " b e n e f i t s r e c e i v e d " t e s t o f e q u i t y r e q u i r e s t h a t a t a x be  levied  i n p r o p o r t i o n t o t h e b e n e f i t s r e c e i v e d from the expend-  i t u r e o f the t a x revenue. property  The e q u i t y o f a u n i f o r m  real  estate  t a x t h e r e f o r e r e s t s on whether o r n o t t h e person who  pays the tax, b e n e f i t s from the t a x - f i n a n c e d  expenditures  in  21  p r o p o r t i o n t o the v a l u e o f the taxed  property.  Research on  t h i s s u b j e c t has f a i l e d t o e s t a b l i s h a very i m p r e s s i v e  cor-  r e l a t i o n between r e a l e s t a t e p r o p e r t y values and the b e n e f i t s r e c e i v e d from the expenditure  of r e a l estate property tax  34 revenue.  Taxes on l a n d however, a r e deemed by some w r i t e r s  t o be more e q u i t a b l e i n terms o f b e n e f i t s r e c e i v e d than taxes on improvements because p a r t o f t h e l a n d v a l u e i s a r e s u l t o f p u b l i c expenditures  f o r p u b l i c s e r v i c e s , while 35  the improvements i s not. e s t a t e t a x a t i o n as being  the v a l u e o f  C r i t i c i s m o f non-uniform r e a l inequitable, r e l a t i v e t o uniform  a t i o n on the b a s i s o f t h e " b e n e f i t s r e c e i v e d " t e s t  tax-  therefore  appears t o be somewhat l e s s than c o n c l u s i v e , s i n c e a  uniform  r e a l e s t a t e t a x i s not n e c e s s a r i l y e q u i t a b l e . The  " a b i l i t y t o pay" t e s t o f e q u i t y i s based on t h e  premise t h a t a t a x i s e q u i t a b l e i f i t i s p r o p o r t i o n a l t o t h e w e a l t h o f the e n t i t y t h a t pays t h e t a x . A u n i f o r m property  real  estate  t a x t h e r e f o r e , o n l y meets t h e " a b i l i t y t o pay" t e s t  o f e q u i t y i f t h e v a l u e o f r e a l e s t a t e h e l d 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.  that the value o f r e a l estate holdings h o l d e r ' s wealth i s no l o n g e r c o n s i d e r e d  The premise  i s i n d i c a t i v e o f the v a l i d s i n c e w e a l t h may  be h e l d i n i n t a n g i b l e forms such as s t o c k s and bonds. r e a l estate property according uniform  A  uniform  t a x i s t h e r e f o r e not n e c e s s a r i l y e q u i t a b l e  t o the " a b i l i t y t o pay" t e s t o f e q u i t y , nor i s a non-  tax more i n e q u i t a b l e . 3 6  The c o n c l u s i o n i n t h e p r e c e d i n g 3" sentence i s supported by e m p i r i c a l evidence i n s e v e r a l s t u d i e s .  22  The  c r i t i c i s m , t h a t non-uniform r e a l e s t a t e  causes resources  t o be a l l o c a t e d i n a manner t h a t r e s u l t s i n  a l e s s than optimum l e v e l o f p u b l i c w e l f a r e ,  i s based on  assumption t h a t a u n i f o r m t a x on r e a l e s t a t e i s n e u t r a l and has resources.  taxation  no d e t r i m e n t a l  the  economically  e f f e c t on the a l l o c a t i o n o f  T h i s assumption i s i n t u r n based on a pure com-  p e t i t i o n model o f the r e a l e s t a t e market which a l l o c a t e s r e sources i n a manner t h a t r e s u l t s i n the optimum l e v e l o f p u b l i c welfare.  In a c t u a l f a c t the l o c a l r e a l e s t a t e market i s more  f r e q u e n t l y f a r from p e r f e c t , and timum a l l o c a t i o n o f r e s o u r c e s  the p o s s i b i l i t y o f an  o c c u r r i n g under c o n d i t i o n s  opof a 3  uniformly The  l e v i e d r e a l e s t a t e tax would be p u r e l y c o i n c i d e n t a l .  operation  o f the r e a l e s t a t e market i s i n f l u e n c e d by  d i v e r s e f a c t o r s as zoning erous taxes, imperfections formly  by-laws, p u b l i c e x p e n d i t u r e s ,  i n t e r e s t r a t e s , technology and  such num-  s o c i a l change.  The  i n the r e a l e s t a t e market are such t h a t a u n i -  l e v i e d r e a l e s t a t e t a x may,  sources so as t o o p t i m i z e r e a l e s t a t e t a x may  or may  public welfare,  not, and  allocate rea non-uniform  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 p r e c e d i n g  paragraphs i n d i c a t e s  t h a t t h e r e i s l i t t l e e m p i r i c a l or t h e o r e t i c a l e v i d e n c e t o supp o r t the t h e s i s t h a t u n i f o r m r e a l e s t a t e p r o p e r t y more e q u i t a b l e and  produces a b e t t e r a l l o c a t i o n o f  than non-uniform r e a l e s t a t e  taxation.  taxation is resources  23  PART I I The  Economic Nature and Consequences o f Real E s t a t e P r o p e r t y Taxes  A l t h o u g h the l i t e r a t u r e i n the f i e l d o f r e a l property ology  estate  t a x a t i o n does not p r o v i d e a v a l i d t h e o r e t i c a l  f o r e v a l u a t i n g the e f f e c t s  property  o f non-uniform r e a l  methodestate  t a x a t i o n , per se, i t does p r o v i d e an abundance o f  i n f o r m a t i o n on the theory ments a f f e c t p r o p e r t y d e c i s i o n s and  o f how  taxes on l a n d and  improve-  v a l u e s , r e n t s , r e a l e s t a t e investment  development.  A b r i e f d e s c r i p t i o n of t h i s  mation i s p r e s e n t e d  i n t h i s chapter,  following chapters,  as a methodology f o r e v a l u a t i n g the  infor-  and w i l l be employed i n  sequences o f an i n s t a n c e o f non-uniform r e a l e s t a t e  con-  property  taxation. 1.  The  Economic D i s t i n c t i o n Some a n a l y s t s t r e a t  as one  Between Land and taxes on l a n d and  Improvements improvements  t a x f o r the purposes o f e v a l u a t i n g the e f f e c t s  estate property  taxes.  The  tween taxes on l a n d and more w i d e l y principle  of  p r a c t i c e of d i f f e r e n t i a t i n g  real be-  improvements however, i s becoming  accepted, e s p e c i a l l y  by the advocates o f  o f t a x i n g l a n d v a l u e o n l y , and  exempting  the  improve-  40 ments. The on l a n d and  b a s i s f o r drawing the d i s t i n c t i o n between taxes taxes on improvements i s the v e r y d i f f e r e n t  nomic c h a r a c t e r i s t i c s e s t a t e possess.  t h a t these tvro components o f  Land i s g e n e r a l l y c o n s i d e r e d  by  eco-  real  economists  24  as a " g i f t o f n a t u r e " it  into existence.  and has no c o s t . ^ *  t h a t r e q u i r e s no human e f f o r t t o b r i n g  I t i s f i x e d i n terms o f s u p p l y and l o c a t i o n The supply  o f l a n d i s n o t l i m i t e d i n ab-  s o l u t e terms, s i n c e i t i s p o s s i b l e i n a sense, t o i n c r e a s e i t through the use o f c a p i t a l and l a b o u r by such means as dredging the bottoms o f water b o d i e s t o c r e a t e i s l a n d s , but t h i s i s more a matter o f c o n v e r t i n g  l a n d from one u s e t o another 42  r a t h e r than a c t u a l l y expanding t h e aggregate supply. i s a l s o considered,  under normal circumstances,  Land  t o be i n d e s t r u c -  t i b l e from n e g l e c t o r misuse, a l t h o u g h 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 destroyed.  The aggregate supply  o r even  o f l a n d t h e r e f o r e cannot be  43 diminished.  The supply  o f l a n d does n o t expand o r c o n t r a c t  i n response t o changes i n economic c o n s i d e r a t i o n s  i n t h e form  of rents or p r i c e s . The  improvement component o f r e a l e s t a t e however i s  a c a p i t a l good and as such i s t h e product o f p a s t human e f f o r t . * ^ The  supply  o f improvements i s n o t f i x e d .  I t can be expanded  by a p p l y i n g l a b o u r t o raw m a t e r i a l s , and a l t e r n a t i v e l y , t h e supply  can be d i m i n i s h e d  by u s i n g l a b o u r t o d e s t r o y  it,  o r by  n e g l e c t i n g r e p a i r s and maintenance t o compensate f o r d e t e r i o r ation.  Improvements have a c o s t a s s o c i a t e d w i t h  t i o n and e x i s t e n c e , and the supply  t h e i r produc-  expands and c o n t r a c t s i n  response t o changes i n r e n t s and p r i c e s . 2. Taxes on Land and Improvements A t a x on l a n d has d i f f e r e n t consequences than a t a x  25  on improvements because o f the d i s t i n c t i v e economic c h a r a c t 45 e r i s t i c s t h a t these two components 3.  possess.  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 Prices A  t a x on the v a l u e o f improvements reduces the net v a l u e  o f t h e stream o f b e n e f i t from the p r o p e r t y and the p r o f i t 46 a b i l i t y o f the investment. d i s c o u r a g e d , fewer new  Investment i n improvements i s  improvements a r e produced, and e x i s t i n g  ones a r e allowed t o d e t e r i o r a t e .  Over a p e r i o d o f time t h e  s u p p l y o f improvements d e c l i n e s r e l a t i v e t o demand and r e n t s begin to r i s e .  I n the case o f commercial p r o p e r t i e s , the i n -  c r e a s e i n r e n t s w i l l cause the volume o f the goods and s e r v i c e s t h a t a r e produced by investment i n these a s s e t s t o d e c l i n e and prices w i l l  increase.  Rents and p r i c e s w i l l i n c r e a s e u n t i l a  new l e v e l o f e q u i l i b r i u m i s e s t a b l i s h e d where the s u p p l y o f improvements i s e q u a l t o the demand.  The l e n g t h o f time r e -  q u i r e d f o r an i n c r e a s e i n the t a x on improvements t o i n c r e a s e r e n t s and p r i c e s t o a new e q u i l i b r i u m l e v e l , i s dependant upon the d u r a b i l i t y o f e x i s t i n g improvements, the s t r e n g t h o f demand, and the r e s p o n s i v e n e s s o f p r o d u c t i o n t o p r o f i t  expect-  47 ations. A t a x on the v a l u e o f l a n d , e x c l u d i n g the v a l u e added by the a p p l i c a t i o n o f p r i v a t e c a p i t a l , a l s o reduces the net v a l u e o f the stream o f b e n e f i t from the p r o p e r t y and the p r o f i t a b i l i t y o f the i n v e s t m e n t . is  fixed  4 8  The supply o f l a n d however,  and does not d e c l i n e i n response t o a decrease i n  26  p r o f i t expectations,  so t h a t r e n t s and p r i c e s o f s e r v i c e s do  not r i s e as a r e s u l t o f imposing a t a x on t h e v a l u e o f l a n d . 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  49  Values  A t the time a t a x i s imposed on the v a l u e o f improvements , i t reduces the n e t v a l u e o f b e n e f i t s r e c e i v e d by t h e owner.  The r e d u c t i o n i n net b e n e f i t s r e c e i v e d  causes t h e v a l u e o f t h e p r o p e r t y  probably  to d e c l i n e i n the short run,  but as r e n t s and p r i c e s i n c r e a s e i n response t o a d e c r e a s e i n the supply  o f improvements the n e t v a l u e o f b e n e f i t r e c e i v e d  is restored.  I n the l o n g r u n , a t a x on the v a l u e o f improve51  ments has l i t t l e The  i f any e f f e c t on p r o p e r t y  value.  n e t v a l u e o f the stream o f b e n e f i t s t h a t a p r o p e r t y  owner r e c e i v e s i s immediately decreased by the amount o f t h e tax, wlhen a t a x i s l e v i e d on the v a l u e o f t h e l a n d .  Property  r e n t s and t h e p r i c e s o f s e r v i c e s cannot be i n c r e a s e d t o compens a t e f o r t h e i n c r e a s e i n t h e t a x on l a n d , because t h e supply of land i s f i x e d .  The decrease i n the n e t v a l u e o f b e n e f i t s  r e c e i v e d t h e r e f o r e continues  f o r the d u r a t i o n o f the tax l e v y  and  i s capitalized.  The v a l u e o f the l a n d d e c r e a s e s i n propor52 t i o n t o the amount o f t h e t a x . 5.  Who Bears t h e Burden o f Real E s t a t e P r o p e r t y A t a x on p r o p e r t y  the p r o p e r t y  Taxes?  t h a t does not reduce t h e s u p p l y o f  and cause r e n t s and p r i c e s t o i n c r e a s e cannot  53 be s h i f t e d .  I t remains a burden on t h e taxed  p r o p e r t y and  i s borne i n the form o f a c a p i t a l l o s s by t h e owner o f the  27  property.  Taxes on l a n d v a l u e a r e t h e r e f o r e borne by the '  owner o f t h e p r o p e r t y . On t h e o t h e r hand, a t a x on t h e v a l u e o f improvements  c  t h a t causes  t h e supply o f improvements t o decrease r e l a t i v e t o  demand and r a i s e s r e n t s and p r i c e s , i s s h i f t e d t o t h e f i n a l consumer o f t h e goods and s e r v i c e s t h a t a r e produced taxed p r o p e r t y .  5 4  w i t h the  A time l a g may e x i s t between t h e i m p o s i t i o n  o f t h e t a x on t h e v a l u e o f improvements, and when p r i c e s and r e n t s have r i s e n s u f f i c i e n t l y t o s h i f t t h e t a x t o tenants and consumer.  The owner o f t h e p r o p e r t y may bear t h e burden o f  the t a x f o r a time, but i n the l o n g r u n i t i s borne by tenants and  consumers. Taxes on both l a n d v a l u e and t h e v a l u e o f improvements  a r e c o n s i d e r e d t o be non s h i f t a b l e on owner-occupied r e s i d e n c e s and a r e borne by t h e owner."*"*  As t h e owner o f t h e p r o p e r t y ,  he bears t h e t a x on t h e l a n d as a c a p i t a l l o s s and as a consumer o f housing, he bears the burden o f t h e t a x on t h e improvements . 6.  R e a l 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 Urban development i s t o a l a r g e e x t e n t t h e p r o d u c t o f  a m u l t i t u d e o f p r i v a t e investment the b a s i s o f t h e p r o f i t motive. economists,  d e c i s i o n s t h a t a r e made on I t i s g e n e r a l l y accepted by  t h a t r e a l e s t a t e p r o p e r t y taxes i n f l u e n c e urban  development through  t h e i r impact  on the p r o f i t a b i l i t y o f r e a l  e s t a t e investments,  and on d e c i s i o n s c o n c e r n i n g t h e u s e o f  28  r e a l estate  resources.  The  e f f e c t of r e a l estate property  d e c i s i o n s and urban development has  e f f o r t however, has  of r e a l estate property  A considerable  been devoted t o the  taxes and  investment  not been examined comprehen-  s i v e l y by means o f e m p i r i c a l s t u d i e s . o f time and  taxes on  amount  analysis  t h e i r e f f e c t s on urban develop-  ment, employing a c c e p t e d economic t h e o r i e s as a n a l y t i c a l t o o l s . The  remaining p o r t i o n o f t h i s chapter c o n s i s t s o f a b r i e f  s c r i p t i o n o f the o b s e r v a t i o n s  and  conclusions  de-  t h a t 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 s p e c u l a t i v e r e a l e s t a t e investment i s one the i n v e s t o r seeks a w i n d f a l l c a p i t a l g a i n due of property  values,  to  i n which  appreciation  r a t h e r than an annual r e t u r n on the  invest-  ment i n the form o f income from rents, or s e r v i c e s i n the o f owner occupied  property.  i n r e a l estate property a t some time i n the  A speculator acquires  expecting  case  an i n t e r e s t  t h a t i t can be d i s p o s e d  of  f u t u r e a t a p r i c e t h a t exceeds the a c q u i s i -  t i o n c o s t , p l u s the c o s t o f h o l d i n g the i n t e r e s t . Speculative  r e a l e s t a t e investments i n u r b a n areas  a r e more f r e q u e n t l y a s s o c i a t e d w i t h vacant l a n d o r l a n d  that  i s underdeveloped.  is  criticized centres them.  Speculation  i n r e a l estate property  f o r i t s e f f e c t s on the development p a t t e r n o f urban  as w e l l as d e g e n e r a t i o n o f p a r t i c u l a r a r e a s Speculation  within  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  i n t e r s p e r s e d w i t h other  p r o p e r t i e s t h a t a r e developed to  their  market p o t e n t i a l .  Development i s f o r c e d t o spread beyond t h e  areas t h a t would be r e q u i r e d to t h e i r f u l l p o t e n t a i l . services i s increased  i f a l l p r o p e r t i e s were developed  The c o s t o f p r o v i d i n g  municipal  as a r e t r a n s p o r t a t i o n c o s t s and t r a v e l  times which r e s u l t s i n a l e s s e f f i c i e n t urban form. A t a x on l a n d v a l u e d i s c o u r a g e s s p e c u l a t i v e r e a l  estate  57 investments. and  The t a x i s c a p i t a l i z e d  i n t o the value  i s borne by the owner o f t h e p r o p e r t y .  T h i s i n c r e a s e s the  c o s t o f h o l d i n g r e a l e s t a t e and reduces the p r o f i t of possible future gains. in  o f land  expectations  I t becomes advantageous t o i n v e s t  some p r o p e r t i e s on t h e b a s i s o f e x i s t i n g use p o t e n t i a l  than s p e c u l a t i o n , and l e s s p r o p e r t y  rather  i s held f o r speculation  than  would be t h e case i f l a n d v a l u e was not taxed. A t a x on t h e v a l u e  o f b u i l d i n g s o r other  however, tends t o encourage s p e c u l a t i o n . value  improvements  A t a x l e v i e d on t h e  o f improvements does not i n c r e a s e t h e c o s t o f h o l d i n g  unimproved l a n d o r improved l a n d .  In t h e case o f unimproved  l a n d , t h e magnitude o f t a x l i a b i l i t y the v a l u e  i s unaffected  by a t a x on  o f improvements, w h i l e i n the case o f improved  land,  the t a x i s passed on t o tenants i n the form o f r e n t and p r i c e 58 increases without decreasing t a x on t h e v a l u e  n e t revenue.  Imposition  o f the improvements p o r t i o n o f r e a l  reduces the investment v a l u e  of a l l r e a l property  of a  estate  f o r purposes 59  t h a t e n t a i l improvements r e l a t i v e t o those t h a t do n o t . Marginal i s held  developments become uneconomical and more  property  i n an undeveloped o r underdeveloped s t a t e f o r s p e c u l a t i v e  30  investments. 8.  Real E s t a t e P r o p e r t y and  Taxes  the I n t e n s i t y o f Land  Use  Urban land can be used f o r a v a r i e t y o f purposes a t v a r i o u s d e n s i t i e s and  the range o f c a p i t a l improvements  vary  from zero f o r a vacant s i t e used as an unpaved  lot,  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  building.^  can  parking office  A t a x t h a t i s l e v i e d on the v a l u e o f l a n d , and  tax t h a t i s l e v i e d on the v a l u e o f improvements, the l e v e l of development and  i n t e n s i t y o f use  a  influences  o f urban l a n d i n  d i f f e r e n t ways. A tax t h a t i s l e v i e d on the c a p i t a l v a l u e o f l a n d i s a f i x e d cost that i s constant o f the p r o p e r t y .  The  i r r e s p e c t i v e o f the l e v e l o f  burden o f the tax per u n i t o f output  d e c r e a s e s w i t h each s u c c e s s i v e u n i t o f a d d i t i o n a l output, that property  owners are encouraged t o develop and use  l a n d a t i t s h i g h e s t and  b e s t use.  An  illustrative  o f t h i s p r i n c i p l e i s presented below f o r the sake o f fication.  use  36  urban  example clari-  Assume t h a t a t a x i s l e v i e d on a p a r c e l o f urban  land amounting t o $100.  I f a t e n - s u i t e apartment b u i l d i n g i s  e r e c t e d on the p r o p e r t y ,  the tax i s $10  per s u i t e , whereas i f  t e n a d d i t i o n a l s u i t e s a r e added, the tax d e c r e a s e s t o $5 suite. and  per  Assuming t h a t t h e r e are no dis-economies o f s c a l e ,  g r o s s income per s u i t e does not d e c l i n e , i t w i l l be more  p r o f i t a b l e to e r e c t a 20-suite w i t h o n l y t e n s u i t e s , due  apartment b u i l d i n g than  to the d i m i n i s h i n g  e f f e c t of  one the  31  tax.  The p r o f i t a b i l i t y o f the p r o p e r t y  w i l l increase  with  each a d d i t i o n a l s u i t e u n t i l dis-economies o f s c a l e , o r decreases  i n g r o s s revenue c a n c e l out the b e n e f i t s o f s p r e a d i n g  the l a n d t a x over an a d d i t i o n a l s u i t e . The  t a x on land a l s o i n c r e a s e s  the costs  associated  w i t h the use o f l a n d r e l a t i v e t o c a p i t a l improvements and encourages c a p i t a l improvements t o be s u b s t i t u t e d f o r l a n d . An example o f t h i s i s when a two-story b u i l d i n g i s e r e c t e d on a s m a l l s i t e as an a l t e r n a t i v e t o a s i n g l e - s t o r y s t r u c t u r e on a larger site. Imposing a t a x on the v a l u e most p r o d u c t i v e higher  and v a l u a b l e  o f l a n d encourages t h e  l a n d t o be developed and used a t  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 p a t t e r n , w i t h a g r e a t e r c o n c e n t r a t i o n  o f a c t i v i t i e s and  larger, better quality structures. A t a x on the v a l u e  of„improvements however, tends t o ft")  d i s c o u r a g e development o f l a n d t o i t s h i g h e s t and b e s t u s e . I t reduces t h e p r o f i t a b i l i t y o f a l l l a n d uses t h a t taxable  involve  improvements, and makes some m a r g i n a l developments  and uses uneconomical.  The number o f 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 d e c l i n e s .  The t a x a l s o makes  m a r g i n a l increments t o b u i l d i n g s i n terms o f h e i g h t , and  quality  and  o f lower q u a l i t y .  increases  bulk,  u n p r o f i t a b l e , so t h a t b u i l d i n g s tend t o be s m a l l e r A t a x on t h e v a l u e o f improvements  the c o s t o f employing c a p i t a l r e l a t i v e t o l a n d , and  32  for  some p u r p o s e s  building  s p a c e as  relatively Capital  s u c h as  housing,  land  a  h o u s e on  a l a r g e l o t becomes  small  more d e s i r a b l e  t h a n a l a r g e house on  i n t e n s i v e developments are  land  i n t e n s i v e d e v e l o p m e n t s , and  land  decreases.  In  summation,  improvements d e c r e a s e s in  both q u a n t i t y  use,  and  i s substituted  the  discouraged  the  ratio  of  imposing a tax  aggregate supply  q u a l i t y , decreases  the  amount o f  9.  Real Estate  land u t i l i z e d Property  Real estate decisions existing  that  f o r urban  T a x e s and  property  i n f l u e n c e the  structures.  A  tax  to  on  of  the  improvements  e c o n o m i c and the  value  physical of  land  the  improvements  ative  of  increases  state  tends  of  tends  renewal of  to  structures  to have a  neg-  effect. The  tends  value  and  land  Urban Renewal  while a  on  of  purposes.  p h y s i c a l standard  tax  value  taxes a l s o a f f e c t urban  on  to  improvements  intensity  e c o n o m i c and  income p r o d u c i n g  t o d e c l i n e as  deterioration estate  land  is a  deteriorate revenue.  the  capacity  t o go  becomes u n p r o f i t a b l e demolished,  fixed so  that  cost the  Real estate  of urban r e a l  improvements d e t e r i o r a t e .  i s permitted  newed, r e p l a c e d , of  relative  of  promote a h i g h  real  a small l o t .  spreads urban development over a l a r g e r area,  the  for  unchecked, a t  A  must be  tax  t h a t does not  d e c r e a s e as  tax  as  increases  physical  some p o i n t  t o o p e r a t e and  or abandoned.  If  estate  on  the  a t an  revalue  improvements  a percentage of  becomes u n p r o f i t a b l e  the  earlier  gross stage  33  of the detericr r a t i o n o f the improvement, and encourages i l i t a t i o n or replacement.  rehab-  A t a x on the v a l u e o f l a n d does not  i n c r e a s e when e x p e n d i t u r e s are made t o m a i n t a i n or renew de64 teriorating structures.  T h i s means t h a t p r o p e r t y owners  a r e a b l e t o r e t a i n a l l o f the b e n e f i t s i n terms o f i n c r e a s e d revenue or s e r v i c e s t h a t r e s u l t from e x p e n d i t u r e s f o r maintenance or renewal,  and such e x p e n d i t u r e s a r e not d i s c o u r a g e d . ^  A t a x on the v a l u e o f improvements i n c r e a s e s the annual c o s t o f m a r g i n a l improvements t o a l e v e l i n excess revenue,  so t h a t they w i l l  placed.  The aggregate  of  not be maintained, nenewed o r r e -  s u p p l y o f improvements d e c l i n e s i n terms  o f q u a n t i t y and q u a l i t y u n t i l the r e n t s f o r the non improvements r i s e s u f f i c i e n t l y t o reimburse tax on the v a l u e o f the improvements.  marginal  the owners f o r the  A l l improvements w i l l  be allowed t o d e t e r i o r a t e t o a g r e a t e r e x t e n t b e f o r e expendi t u r e s f o r maintenance or renewal  a r e undertaken when a t a x i s  imposed on the v a l u e o f improvements.^^ In summary, a t a x on the v a l u e o f l a n d encourages maintenance, renewal  and replacement  the  o f ageing o r d e t e r i o r a t e d  s t r u c t u r e s w h i l e a t a x on the v a l u e o f improvements has  the  o p p o s i t e e f f e c t and d i s c o u r a g e s e x p e n d i t u r e s f o r maintenance, renewal and replacement  of e x i s t i n g structures.  Taxes on  im-  provements a r e c o n s i d e r e d t o be a c o n t r i b u t i n g f a c t o r i n the g e n e r a t i o n o f urban b l i g h t , decay and slums w h i l e taxes on l a n d are c o n s i d e r e d t o r e t a r d these symptoms.  34  C H A P T E R  II  FOOTNOTES 1.  Grant K. Crawford, Canadian M u n i c i p a l Government (Toronto: U n i v e r s i t y o f T o r o n t o P r e s s ) , p. 213.  2.  I b i d . , p. 214.  3.  I b i d . , p. 211.  4.  Beeman, The P r o p e r t y Tax, p. 14.  5.  Economic C o u n c i l o f Canada, F o u r t h Annual Review, The Canadian Economy From t h e I960's t o the 1970's (Ottawa: The Queen's P r i n t e r , 1967), p. 219.  6.  C i t y o f Regina, C o m p t r o l l e r ' s Department, C i t y o f Regina F i n a n c i a l Statement f o r the Year Ending December 31, 1970, (Regina, Saskatchewan, 1971) p. 42.  7.  Barlowe, Land Resource Economics, p. 558; Mary Rawson, P r o p e r t y T a x a t i o n and Urban Development (Washington, D.C.: Urban Land I n s t i t u t e , 1961;, p. 29.  8.  D. N e t z e r , Economics o f the P r o p e r t y 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 S e t t i n g , ( T o r o n t o : Copp C l a r k P u b l i s h i n g Co.  L t d . 1959), p. 330.  9.  Netzer, Economics o f the P r o p e r t y Tax, p. 67.  10.  Inman, Economics, p. 330.  11.  D. Netzer, Economics and Urban Problems, (New York: B a s i c Books, I n c . , 1970), p. 67.  12.  Netzer, Economics o f the P r o p e r t y Tax, p. 40.  13.  3eeman, The P r o p e r t y Tax, p. 19.  14.  Netzer, Economics and Urban Problems, p. 71.  15.  I b i d . , p. 68.  16.  Beeman, The P r o p e r t y Tax.  17.  A r t h u r P.Becker, ed., Land and B u i l d i n g Taxes: Their E f f e c t on Economic Development, (Madison, W i s c o n s i n : 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)j D a n i e l M. H o l l a n d , ed. , The Assessment o f Land Value, (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 , 1970); W a l t e r Morton, Housing T a x a t i o n , (Madison, W i s e : U n i v e r s i t y o f W i s o n s i n P r e s s , 1955).  35  18.  Netzer, Economics and Urban Problems, pp. 190 - 97.  19.  Netzer, Economics o f the P r o p e r t y Tax; Beeman, The P r o p e r t y Tax.  20.  Netzer, Economics o f t h e P r o p e r t y Tax, p. 110.  21.  Ibid.,  p. 75.  22.  Ibid.,  pp. 165 - 79.  23. 24.  . ^ _ assessed v a l u e Assessment r a t i o = — - - - ^ - . - ^ - g Mason G a f f r e y , "Adequacy o f Land as a Tax Base", The Assessment o f Land Value, ed. by D a n i e l M. Hollard.f (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 , 1970), p. 172.  25.  F i s h e r and F i s h e r , Urban Real E s t a t e , p. 457.  26.  Netzer, Economics o f t h e P r o p e r t y Tax, p. 81.  27.  I b i d . , p. 82.  28.  F i s h e r and F i s h e r , Urban Real E s t a t e , p. 458.  29.  Netzer, Economics o f t h e P r o p e r t y Tax, p. 79.  30.  G a f f r e y , "Adequacy o f Land as a Tax Base", p. 185.  31.  A.M. Woodruff, "Assessment Standards? H i g h e s t and Best Use as a B a s i s f o r Land A p p r a i s a l and Assessment", i n The P r o p e r t y Tax and I t s A d m i n i s t r a t i o n , ed. by A r t h u r D. Lynn, Jr. (Madison, Wise.: U n i v e r s i t y o f Wisconsin Press,  0  0  1969), p. 182.  32.  Weimer and Hoyt, Real E s t a t e , p. 196.  33.  Rawson, P r o p e r t y T a x a t i o n and Urban Development, p. 29.  34.  Beeman, The P r o p e r t y Tax, p. 14.  35.  Rawson, P r o p e r t y T a x a t i o n and Urban Development, p. 30.  36.  Inman, Economics, p. 330.  37.  Morton, Housing T a x a t i o n , p. 176.  38.  Beeman, The P r o p e r t y Tax, p. 20  39.  R i c h a r d A. Musgrave, The Theory o f P u b l i c Finance, York: McGraw-Hill Book Company, 1959), p. 143.  (New  36  40.  Netzer, Economics and Urban Problems; Rawson, P r o p e r t y T a x a t i o n and Urban Development, Turvey, Economics o f Real Property.  41.  Inman, Economics, p . 116.  42.  Ibid.  43.  Becker, Land and B u i l d i n g  44.  I b i d , p. 17.  45.  Edwin Seligman, 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), p. 288.  46.  N e t z e r , Economics o f t h e P r o p e r t y Tax, p. 36.  47.  I b i d . , p. 33.  48.  I b i d . , p. 33.  49.  Becker, Land and B u i l d i n g  50.  Barlowe, Land Resource Economics, p. 541.  51.  Becker, Land and B u i l d i n g  52.  Barlowe, Land Resource Economics, p. 543.  53.  I b i d . , p. 541.  54.  Becker, Land and B u i l d i n g  55.  N e t z e r , Economics o f t h e P r o p e r t y Tax, p. 36.  56.  Rawson, P r o p e r t y T a x a t i o n and Urban Development,  57.  Turvey, The Economics o f Real P r o p e r t y , p. 9 1 V F r e d e r i c k D. S t o c k e r , " E f f e c t s o f T a x a t i o n on Urban Land Use", A p p r a i s a l J o u r n a l , XXXlX (January, 1971), p. 66.  58.  Barlowe, Land Resource Economics, p. 542.  59.  Mason G a f f r e y , "Land P l a n n i n g and t h e P r o p e r t y Tax", J o u r n a l o f t h e American I n s t i t u t e o f P l a n n e r s , XXXV (May 1969), P. 179.  60.  A r t h u r P.Becker, " P r i n c i p l e s o f T a x i n g Land and B u i l d i n g s f o r Economic Development", i n 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, ed. by A r t h u r P. Becker, (Madison W i s e : U n i v e r s i t y of Wisconsin Press, 1969), p. 22.  Taxes, p. 14.  Taxes, p. 17.  Taxes, p. 20.  Taxes, p. 17.  pp. 27 - 28.  ;  37  61.  Ibid; N e t z e r , Economics and Urban Problems, p. 197; Turvey, Economics o f Real P r o p e r t y , p. 88.  62.  G a f f r e y , "Adequacy o f Land as a Tax Base," p. 192.  63.  Ibid.  64.  Becker, " P r i n c i p l e s o f T a x i n g Land and B u i l d i n g s " , p. 26; G a f f r e y , "Adequacy o f Land as a Tax Base", p. 193.  65.  Turvey, The Economics o f Real P r o p e r t y , p. 92.  66.  Becker, " P r i n c i p l e s o f Taxing Land and B u i l d i n g s " ; p. 22.  67.  James Heilbrum, "Reforming the R e a l E s t a t e Tax t o Encourage Housing Maintenance and R e h a b i l i t a t i o n " , i n 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, ed. by A r t h u r 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 1.  The  PRACTICE  Policy Real e s t a t e p r o p e r t y  by the c i t y c o u n c i l and  t a x a t i o n i n Regina i s  administered  t h e i r appointed o f f i c i a l s under the  visions o f provincial legislation.*  The  pro-  provincial legislation  s p e c i f i e s t h a t a u n i f o r m tax r a t e s h a l l be a p p l i e d to  the  2  a s s e s s e d v a l u e o f a l l non-exempt r e a l e s t a t e . is  met  i n p r a c t i c e so t h a t any  This  l a c k of u n i f o r m i t y  condition  i n taxation  must be the r e s u l t o f non-uniform assessment p r a c t i c e s . The  primary o b j e c t i v e o f the p r o v i n c i a l l e g i s l a t i o n 3  is  e q u i t y , but the b a s i s o f assessment i s not c l e a r l y  defined.  Land i s to be a s s e s s e d a t i t s " f a i r v a l u e " w h i l e improvements s h a l l not be a s s e s s e d a t more than 60% term " f a i r v a l u e "  i s not d e f i n e d  such as market v a l u e  i n terms o f o b j e c t i v e  or r e n t a l v a l u e ,  fied basis for evaluating  of " f a i r value".  basis f o r evaluating  the u n i f o r m i t y  o f assessment.  petition. value  only be  expressed as  the u n i f o r m i t y  o f assessment.  For a a  Market  i n d i c a t o r of value  i d e n t i c a l under c o n d i t i o n s  In spite  speci-  or s a l e p r i c e , w i l l be used as  or s e l l i n g p r i c e i s not a p e r f e c t they w i l l  criteria  so t h a t t h e r e i s no  the purpose o f t h i s study, assessed v a l u e s percentage o f market v a l u e  The  value  since  o f p e r f e c t cora-  o f t h e a f o r e s a i d d e f i c i e n c y o f market  o r selling p r i c e ,  i t i s probably a more r e l i a b l e  estimate  39  o f v a l u e than those a r r i v e d a t by such mathematical  methods as  the l a n d r e s i d u a l method, which tend t o produce d i f f e r e n t  values  under d i f f e r e n t c o n d i t i o n s . ^ The p o l i c y which guides r e a l e s t a t e p r o p e r t y a s s e s s ment i n Regina  i s not c l e a r l y e n u n c i a t e d ;  t r u e f o r the assessment o f l a n d .  this i s especially  An i n f o r m a t i o n sheet which  i s d i s t r i b u t e d by the C i t y o f Regina, C i t y A s s e s s o r ' s  Depart-  ment, s t a t e s t h a t b u i l d i n g s a r e assessed on the b a s i s o f o f the 1946  replacement  45%  c o s t and d e p r e c i a t e d a c c o r d i n g t o 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  o b j e c t i v e c r i t e r i a on which t o base the assessment o f b u i l d i n g s , s i n c e b u i l d i n g c o s t s from the past a r e r e a d i l y a v a i l a b l e .  The  i n f o r m a t i o n sheet goes on t o s t a t e t h a t land i s assessed a t " f a i r e q u i t a b l e v a l u e " , which i s intended t o be a f a i r i n comparison w i t h o t h e r p r o p e r t i e s i n Regina.  The  value  assessed  v a l u e a c o r d i n g t o the sheet, tends t o be approximately  60 - 65%  o f market v a l u e , a l t h o u g h a d m i t t e d l y , market v a l u e i s not used as the b a s i s o f assessment.^ The C i t y o f Regina  l e v i e s a b u s i n e s s tax which i s , i n  r e a l i t y , a s p e c i a l tax on improvements.  B u s i n e s s premises  a s s e s s e d a t a s p e c i f i e d r a t e per square f o o t o f occupied space.  are  floor  The assessment r a t e v a r i e s a c c o r d i n g t o the type o f  business.  The  same m i l l r a t e t h a t i s a p p l i e d t o the assessed  v a l u e of r e a l e s t a t e p r o p e r t y i s a l s o a p p l i e d t o the b u s i n e s s assessment.  The b u s i n e s s t a x however, i s l e v i e d a g a i n s t the  b u s i n e s s r a t h e r than the owner o f the p r o p e r t y .  The  business  40  tax i s mentioned here t o e x p l a i n why  i t i s i n c l u d e d as p a r t o f  the t a x base i n Chapter IV. 2.  The Study A r e a 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, which i s  the p r i n c i p a l a r e a o f c o n c e r n o f t h i s study, encompasses approxi m a t e l y twenty f i v e c i t y b l o c k s immediately a d j a c e n t t o the Regina c e n t r a l b u s i n e s s d i s t r i c t as shown on F i g u r e 1.  Land  use i n f o r m a t i o n 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 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 Land Use Category Apartments - Walk-up Apartments - H i g h - r i s e Other R e s i d e n t i a l Commercial Vacant Land Government Public Service** Total  Net A r e a * Square Feet  %  513,853 135,885 1,769,148 148,488 205,826 23,125 550.625  15.4 4.1 52.8 4.4 6.0 0.7 16.6  3,346,950  100.0  * Roads, s i d e w a l k s and lanes a r e e x c l u d e d . * * P u b l i c S e r v i c e i n c l u d e s churches, s c h o o l s and the YMCA Most o f the l a n d , e x c l u d i n g s t r e e t s and l a n e s , 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, 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% o f the  l a n d , w h i l e 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 u s e s , which i n c l u d e s s i n g l e  family  d w e l l i n g s , b o a r d i n g houses, rooming houses o r houses which have  41  V  42  been converted t o produce two  or more s u i t e s , occupy 52.8%  the t o t a l d e v e l o p a b l e l a n d i n the a r e a . all  types occupy 72.3%  R e s i d e n t i a l uses  o f the a v a i l a b l e l a n d .  c o n s t i t u t e s the next most important l a n d use a v a i l a b l e land f o l l o w e d Government w i t h The  by vacant, 6.0%,  of  Public  of  service  w i t h 16.6%  of  Commercial 4.4%  the  and  0.7%.  C i t y o f Regina Zoning By-law p e r m i t s a wide v a r -  i e t y o f uses 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. Apartments, b o a r d i n g houses, rooming houses and mitted  i n the a r e a as r e s i d e n t i a l u s e s , but  h o t e l s are  single  per-  family 9  dwelling  u n i t s a r e c l a s s e d as l e g a l non-conforming u s e s ,  A  v a r i e t y of commercial uses a r e a l s o p e r m i t t e d i n t h e zone i n c l u d i n g banks, c r e d i t u n i o n s , f i n a n c e and e s t a t e o f f i c e s and The w i t h 68.7%  loan o f f i c e s , r e a l  insurance o f f i c e s .  development i n the study a r e a i s r e l a t i v e l y mature  o f the s t r u c t u r e s b u i l t p r i o r t o 1921,  17.6%  b u i l t between 1921  1940.  10  and  1940  and  o n l y 13.7%  an a d d i t i o n a l built  In summary, the study a r e a i s c h a r a c t e r i z e d dominately r e s i d e n t i a l s t r u c t u r e s o f r e l a t i v e l y mature t h a t a r e s l o w l y being r e p l a c e d  by modern apartment  and  office buildings.  3.  The P r a c t i c e of A s s e s s i n g Land V a l u e f o r T a x a t i o n i n the Study Area The  since  by  preage,  buildings  a c t u a l assessment o f l a n d v a l u e f o r r e a l e s t a t e  t a x a t i o n purposes 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  43  i s r e l a t i v e l y complex s i n c e a number o f d i f f e r e n t r a t e s are used.  The  t a x a t i o n r a t e s t h a t a r e used i n t h i s study  taken from the 1970  tax r o l l ,  and  have been i n e f f e c t s i n c e  a general  re-assessment o f land v a l u e s  taken i n  1968. The  highest  i n the a r e a was  l a n d t a x a t i o n r a t e s i n the  b u s i n e s s t r a n s i t i o n zone are found on p r o p e r t y f o r commercial purposes.  are  under-  residential-  t h a t i s used  Land, t h a t i s used f o r e x c l u s i v e l y  commercial purposes, i s a s s e s s e d a t a u n i f o r m r a t e o f $200 per f r o n t f o o t f o r l o t s h a v i n g a depth o f 125 t h e i r l o c a t i o n w i t h i n the study a r e a . both r e s i d e n t i a l and rates.  The  feet, regardless  of  Lots t h a t are used f o r  commercial purposes are a s s e s s e d a t lower  combined r e s i d e n t i a l - c o m m e r c i a l  a t r a t e s which v a r y between $88 pending upon the e x t e n t  and  $193  l o t s are  assessed  per f r o n t f o o t ,  o f the commercial use.  The  de-  mean  a s s e s s e d r a t e f o r l a n d t h a t i s used f o r commercial purposes e x c l u s i v e l y , and  l a n d t h a t i s used f o r both r e s i d e n t i a l  commercial purposes, i s $193  per  front foot.  See  Table  and IX.  TABLE I I In The  1970 Assessed Land Values R e s i d e n t i a l - B u s i n e s s T r a n s i t i o n Zone  Land Use Category Vacant Land Commercial Apartments Other R e s i d e n t i a l Total  Assessed Value ($) 1,322 1,164 5,183 14,116 21,785  $  172,940 225,470 522,650 918,250 1,839,310  Mean A s s e s s e d V a l u e per F r o n t Foot ($)  $  130 193' 100 65 84  44  * The mean assessed v a l u e i s lower then the standard assessment r a t e o f $200.00 p e r f r o n t f o o t because p r o p e r t i e s t h a t have both commercial and r e s i d e n t i a l uses a r e a s s e s s e d a t a lower rate. Land t h a t i s used  f o r purposes  o t h e r than commercial  f u n c t i o n s i s assessed a t c o n s i d e r a b l y lower r a t e s .  Lots,  which a r e occupied by e i t h e r designed walk-up o r h i g h - r i s e apartments,  a r e a s s e s s e d a t a u n i f o r m r a t e o f $100 p e r f r o n t  f o o t when the l o t i s 125 f e e t deep and $102 per f r o n t f o o t when the l o t depth i s 130 f e e t .  The a s s e s s e d v a l u e r a t e s p e r f r o n t  f o o t f o r apartment s i t e s a r e u n i f o r m throughout  the study a r e a  regardless of the area o f the l o t , or i t s l o c a t i o n w i t h i n the area.  T a b l e I I shows t h a t t h e mean assessed v a l u e o f apartment  l o t s i n the study a r e a i s $100 p e r f r o n t The  foot.  l a n d assessment r a t e s t h a t a r e used  f o r other  types o f r e s i d e n t i a l l o t s i n c l u d i n g s i n g l e f a m i l y d w e l l i n g s , b o a r d i n g or rooming houses and converted m u l t i p l e f a m i l y d w e l l i n g s a r e somewhat more complex than those a s s o c i a t e d w i t h or designed apartment s i t e s .  commercial  The most common r a t e s f o r l o t s  t h a t a r e 125 f e e t deep a r e $64.80 p e r f r o n t f o o t f o r 25 f o o t wide l o t s and $64.40 per f r o n t f o o t f o r 50 f o o t wide l o t s . L o t s t h a t a r e 130 f e e t deep a r e assessed a t $68.30 p e r f r o n t foot.  L o t s which a r e 125 f e e t deep, and a r e l o c a t e d o p p o s i t e  s c h o o l s and p l a y i n g f i e l d s , a r e a s s e s s e d a t a somewhat 1  lower  r a t e o f $58.00.per f r o n t f o o t , due t o the d e t r i m e n t a l e f f e c t o f the n o i s e generated values.  by these f a c i l i t i e s on a d j a c e n t p r o p e r t y  The mean assessed v a l u e o f l a n d t h a t i s used  r e s i d e n t i a l uses i n the study a r e a i s $65 per f r o n t  f o r these  foot.  45  Land which i s v a c a n t o f b u i l d i n g s i s a l s o a s s e s s e d a t d i f f e r e n t r a t e s depending upon the use which i s used f o r s u r f a c e p a r k i n g  and  o f the p r o p e r t y .  Land  i s associated with a  commercial f u n c t i o n such as an o f f i c e b u i l d i n g i s assessed a r a t e of $200 per parking  front foot.  r e l a t e d to r e s i d e n t i a l property,  a s s e s s e d a t a r a t e o f $100 value  that there  information  mean a s s e s s e d  i n the p r e c e e d i n g paragraphs i n d i c a t e s  i s a s t r o n g r e l a t i o n s h i p between e x i s t i n g l a n d  land assessment r a t e s .  The  The  per f r o n t f o o t .  The  l o c a t i o n of property  study a r e a appears t o have l i t t l e 4.  surface  and unused l a n d , i s  per f r o n t f o o t .  o f vacant l a n d i s $130 The  and  Land, which i s used f o r  at  use  within  the  e f f e c t on l a n d assessment r a t e s .  S e l l i n g P r i c e o f Land i n the Study A r e a Records o f land s a l e s i n Regina are not maintained  a comprehensive b a s i s . land s a l e s i n f o r m a t i o n ected  and  The  on  o n l y r e a d i l y a v a i l a b l e source o f  i s the incomplete r e c o r d s  maintained by the c i t y a s s e s s o r .  c l u d e o n l y those s a l e s where one  t h a t are  These r e c o r d s  or both p a r t i e s o f the  collin-  trans-  a c t i o n were w i l l i n g t o r e v e a l the s e l l i n g p r i c e . The  number o f p r o p e r t y  s a l e s i n the study area where  the s a l e p r i c e can be used as an i n d i c a t i o n o f the market  value  o f 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 e i t h e r vacant o f improvements a t the time o f the s a l e , or the ments must have l i t t l e use after.  v a l u e and  improve-  be removed s h o r t l y t h e r e -  G i v e n the above mentioned r e s t r i c t i o n s , o n l y 15  e r t i e s w e r e exchanged between 1961  be  and  1970  prop-  f o r which s a l e  46  p r i c e s are a v a i l a b l e and v a l u e . ! See  T a b l e I I I , page  The  The  the h i g h e s t  not  appear to be e x p l a i n a b l e  depreciation  properties  i n the study was  lowest s a l e p r i c e f o r l a n d was was  $814  land  exchanged  degree o f v a r i a t i o n , as shown i n T a b l e  and  to time.  i n d i c a t i o n s of  47.  p r i c e a t which land  exhibits a considerable III.  can be used as  per  $320 per  front foot.  The  front  foot  v a r i a t i o n does  i n terms o f e i t h e r a p p r e c i a t i o n  over time, s i n c e the v a r i a t i o n i s e r r a t i c  or  relative  D i v i d i n g the combined t o t a l s a l e p r i c e o f a l l the by  t h e i r combined t o t a l f r o n t a g e ,  s a l e p r i c e o f $497 per f r o n t The  reveals  a mean  foot.  f i f t e e n properties  were a l l occupied by  large  s i n g l e f a m i l y detached houses, or s i n g l e f a m i l y a t t a c h e d houses a t the  time o f the l i s t e d s a l e s , and  demolished w i t h i n one  year o f the  the s t r u c t u r e s were a l l  sale.  The  s i t e s have a l l  been redeveloped w i t h walk-up or h i g h - r i s e apartment except the two per  which were s o l d f o r $533 per  f r o n t f o o t , and  d i c a t e t h a t the  are  still  vacant.  f r o n f o o t and  consideration  the  buildings  5.  The S e l l i n g P r i c e o f R e s i d e n t i a l i n Developing, S u b d i v i s i o n s '  on the p r o e r t i e s a t the  Sales information  $543  T h i s would appear t o i n -  s e l l i n g p r i c e s r e p r e s e n t the purchasor's  o f the v a l u e o f land w i t h l i t t l e  subdivisions  buildings,  opinion  t o the v a l u e  time o f the  of  sale.  Land  for r e s i d e n t i a l l o t s i n developing  i n Regina i s a l s o r e l a t i v e l y s p a r c e .  source of a v a i l a b l e i n f o r m a t i o n  i s the  The  only  incomplete r e c o r d s  47  TABLE I I I Land S a l e s In The R e s i d e n t i a l - B u s i n e s s T r a n s i t i o n Zone Frontage (feet)  Year ' Sale 1952 1963 1964 1955 1965 1965 1965 1966 1966 1957 1968 1968 1969 1969 1970  Total  140.0 97.0 50.0 50.0 50.0 75.0 75.0 87.5 150.0 100.0 50.0 50.0 75.0 37.5 200.0 1,287.0  Mean S a l e P r i c e = ""1237  maintained by t h e c i t y a s s e s s o r . transactions one  i n two s u b d i v i s i o n s  =  Sale Price ($)  Sale Price / F r o n t Foot ($)  $113,960 34,920 21,000 22,500 24,000 39,975 40,725 28,000 61,950 38,000 22,000 24,500 32,400 26,063 110,000 $639,993  $814 360 420 450 480 533 543 320 413 380 440 490 432 695 550  $  4  9  7  p  e  r  F  r  o  n  t  F  o  o  t  '  A s i g n i f i c a n t number o f s a l e s are a v a i l a b l e .  The f a c t t h a t  i s the most p r e s t i g e o u s new r e s i d e n t i a l a r e a o f t h e c i t y ,  w h i l e the o t h e r i s one o f t h e most modest, means t h a t extremes o f t h e spectrum o f r e s i d e n t i a l l a n d A t o t a l o f 43 f u l l y s e r v i c e d  both  s a l e s a r e covered.  s i n g l e family r e s i d e n t i a l  l o t s i n A l b e r t Park, t h e most p r e s t i g e o u s and expensive subd i v i s i o n , were s o l d i n 1969 and 1970. t h e s e 43 l o t s v a r i e d  The s e l l i n g p r i c e o f  from a low o f $72 p e r f r o n t f o o t t o a  h i g h o f $91 per f r o n t f o o t as shown i n T a b l e IV.  The degree  o f v a r i a t i o n however, i s l e s s extreme than i t would appear,  48  only  one l o t s o l d f o r $72 per f r o n t f o o t and o n l y  f o r $91, per  The remaining l o t s v a r i e d  three sold  i n p r i c e from $77 t o $87  f r o n t f o o t w i t h c o n c e n t r a t i o n s a t e i t h e r extreme o f t h i s  range.  Dividing  the t o t a l p r i c e p a i d f o r a l l the l o t s by t h e  combined f r o n t a g e s o f t h e l o t s , produces a mean s a l e p r i c e o f $84 p e r f r o n t  foot. TABLE IV  Land S a l e s I n A l b e r t Park Sale Price /Front Foot ($)  Number of Lots  72.00 77.00 78.00 85.00 86.00 87.00 91.00  1 10 2 1 10 16 3 43  Subdivision"  Total Frontage (feet)  Total Price ($)  59 599 124 62 652 992 204 2692  4,428.00 46,123.00 9,672.00 5,270.00 56,072.00 86,304.00 18,564.00 $226,253.00  Mean S a l e P r i c e = - " 2 6 9 2 " -  =  $  8 4  P  F r o n t Foot.  e r  "One o f the l o t s t h a t s o l d f o r $78 per f r o n t f o o t was s o l d i n 1970, t h e remaining l o t s were a l l s o l d i n 1969.  serviced  Sales information  i s only a v a i l a b l e f o r eleven  fully  l o t s i n Glencairn,  the more modest s u b d i v i s i o n .  The  range o f v a r i a t i o n from the lowest t o t h e h i g h e s t  sale price  i s s i m i l a r t o t h a t found i n A l b e r t Park, but t h e  concentration  around the two p r i c e s i s l a c k i n g i n G l e n c a i r n ,  Prices  range  from a low o f $37, t o $56 per f r o n t f o o t , and a r e r e l a t i v e l y u n i f o r m l y d i s t r i b u t e d betwen these two extremes, as can be seen i n T a b l e V.  Dividing  the t o t a l p r i c e p a i d  f o r a l l o f the l o t s  by t h e combined f r o n t a g e s y i e l d s a mean s a l e p r i c e o f $46 p e r front  foot. TABLE V Land S a l e s i n G l e n c a i r n  Number of Lots  Subdivision*  Sale Price / F r o n t Foot ($)  Total Frontage (feet)  Total Price ($)  37.00 42.00 42.50 47.00 48.00 49.00 52.00 56.80  54 100 100 54 109 54 54 50 575  1,998.00 4,200.00 4,250.00 2,538.00 5,232.00 2,646.00 2,808.00 2,800.00 26,472.00  1 2 2 1 2 1 1 1 11  Mean S a l e P r i c e =  = $46 p e r F r o n t Foot.  *The l o t t h a t s o l d f o r $37 per f r o n t f o o t and one o f t h e l o t s t h a t s o l d f o r $42.50 p e r f r o n t f o o t were purchased i n 1970, the remaining l o t s were a l l purchased i n 1969. 6.  The Assessment o f R e s i d e n t i a l Land i n Developing The  C i t y o f Regina i s d i v i d e d  d e n t i a l assessment d i s t r i c t s .  Subdivisions  i n t o a number o f r e s i -  A uniform r e s i d e n t i a l land  ment v a l u e i s a s s i g n e d t o each d i s t r i c t and a l l s i n g l e r e s i d e n t i a l land per  front  i n each d i s t r i c t  assess-  family  i s a s s e s s e d a t the same v a l u e  foot.** In A l b e r t Park, one o f t h e d e v e l o p i n g r e s i d e n t i a l  subdivisions  t h a t was s e l e c t e d  f o r examination, the s t a n d a r d  s i n g l e f a m i l y r e s i d e n t i a l land assessment r a t e i s $43 per f r o n t foot. land  The s t a n d a r d r a t e o f $43 per f r o n t f o o t i s used as t h e assessment v a l u e f o r a l l s i n g l e f a m i l y r e s i d e n t i a l l o t s  50  i n the s u b d i v i s i o n .  T h i s i s the h i g h e s t  assessment r a t e f o r d e v e l o p i n g  1970 r e s i d e n t i a l  land  s u b d i v i s i o n s i n Regina, but the  r a t e used i n s e v e r a l o l d e r s u b d i v i s i o n s i s somewhat h i g h e r . The  standard  s i n g l e family r e s i d e n t i a l land  ment r a t e t h a t i s used i n G l e n c a i r n ,  the other  d i v i s i o n , a t $25 per f r o n t f o o t i s c o n s i d e r a b l y used i n A l b e r t Park.  assess-  s e l e c t e d sublower than t h a t  T h i s i s t h e lowest r a t e used f o r develop-  i n g s u b d i v i s i o n s i n 1970 and r e f l e c t s t h e l e s s d e s i r a b l e l o c a t i o n adjacent area.  t o 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  The o n l y lower l a n d assessment r a t e s a r e found i n o l d e r  areas o f t h e c i t y which a r e becoming rundown.  A l l o f the s i n g l e  f a m i l y r e s i d e n t i a l l o t s i n G l e n c a i r n were a s s e s s e d a t the s t a n dard r a t e o f $25 per f r o n t f o o t i n 1970. 7.  Assessed Land V a l u e Expressed As A Percentage Of S a l e s Recorded s a l e s i n f o r m a t i o n  Price  f o r l o t s i n the Glencairn  s u b d i v i s i o n i n d i c a t e d t h a t the s e l l i n g p r i c e f o r s i n g l e f a m i l y r e s i d e n t i a l l o t s v a r i e s between $37 and $56 a f r o n t f o o t , prod u c i n g a mean s a l e p r i c e o f $46.  Expressing  t h e standard  land  assessment r a t e t h a t t h e c i t y a s s e s s o r uses i n t h i s a r e a as a percentage o f s a l e s p r i c e , r e v e a l s of the highest,  t h a t i t i s e q u a l t o 44.5%  67.6% o f t h e lowest and 54.3% o f t h e mean s a l e  price. The  p r i c e s t h a t were r e c e i v e d  f o r the s a l e o f s i n g l e  f a m i l y r e s i d e n t i a l l o t s i n t h e A l b e r t Park s u b d i v i s i o n a r e considerably higher  than those i n G l e n c a i r n .  Single family  lots  51  s o l d f o r p r i c e s r a n g i n g from a low o f $72 per f r o n t f o o t t o a h i g h o f $91 and the mean s a l e p r i c e was $84 per f r o n t  foot.  When t h e standard l a n d assessment r a t e t h a t i s used i n A l b e r t Park i s expressed as a percentage o f s a l e s p r i c e , t h e r e s p e c t i v e percentages f o r low, h i g h and mean s a l e p r i c e s a r e v e r y s i m i l a r t o those found i n G l e n c a i r n .  The standard assessment  r a t e o f $43 per f r o n t f o o t i n A l b e r t Park i s e q u a l t o 59.7% o f t h e lowest, 47.3% o f the h i g h e s t  and 51.2% o f t h e mean s a l e  price. E x p r e s s i n g l a n d assessment r a t e s as a percentage o f 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 c o m p l i c a t e d than i n t h e two r e s i d e n t i a l  subdivisions  because, a number o f d i f f e r e n t assessment r a t e s a r e used, and sale prices e x h i b i t a greater  degree o f v a r i a t i o n .  In order to  s i m p l i f y t h e process somewhat, o n l y the standard r a t e f o r l o t s 125 f e e t i n depth, and 50 f e e t o r g r e a t e r  i n width w i l l be  used. The  examination o f s a l e p r i c e s f o r land  dential-business  i n the r e s i -  t r a n s i t i o n zone between 1962 and 1970  revealed  t h a t they v a r i e d from a low o f $320 p e r f r o n t f o o t t o a h i g h o f $814 p e r f r o n t f o o t , w i t h a mean s e l l i n g p r i c e o f $497 p e r front foot.  A s t a n d a r d l a n d assessment r a t e o f $64.40 per f r o n t  f o o t i s used t o a s s e s s land  t h a t i s used f o r r e s i d e n t i a l pur-  poses o t h e r than walk-up or h i g h - r i s e apartments.  This rate i s  e q u a l t o 20.1% o f the low s e l l i n g p r i c e , 7.9% o f t h e h i g h e s t selling  p r i c e , and 13.0% o f the mean s a l e p r i c e .  52  A standard land assessment r a t e o f $100 p e r f r o n t f o o t i s employed f o r apartment b u i l d i n g s i t e s and l o t s which a r e vacant o f b u i l d i n g s activities.  This  and a r e n o t a s s o c i a t e d  w i t h commercial  standard r a t e i s equal t o 31,3% o f t h e lowest  s a l e p r i c e , 12.3% o f t h e h i g h e s t ,  and 20,1% o f t h e mean s a l e  price. Land t h a t i s used f o r commercial purposes parking l o t s i s assessed a t the considerably $200 p e r f r o n t f o o t . age  including  higher rate of  When t h i s r a t e i s expressed as a p e r c e n t -  o f s a l e p r i c e s , i t works out t o 62.5% o f t h e lowest s a l e  p r i c e , 24.6% o f t h e h i g h e s t ,  and 40.2% o f t h e c a l c u l a t e d mean  sale price. The  uniformity  assessment p r a c t i c e s  or lack o f uniformity  i n the r e s i d e n t i a l - b u s i n e s s  developing r e s i d e n t i a l subdivisions following  chapters.  between l a n d zone and t h e  w i l l be examined i n t h e  53  C H A P T E R  III  FOOTNOTES 1.  Urban M u n i c i p a l i t y  2.  I b i d . , s e c . 360.  3.  I b i d . , s e c . 320.  4.  Weiner and Hoyt, R e a l E s t a t e , p. 144.  5  -  Frederick r  A c t , 1970, 18 E l i z .  2, Chapter 78.  Case » Real E s t a t e , ( B o s t o n ; A l l y n and 3acon, I n c , 1956), p. 189. C i t y o f Regina A s s e s s o r ' s Department, "Assessment f o r T a x a t i o n - C i t y o f Regina - 1969". 1969. 1  v  6. 7.  Ibid.  8.  The l a n d use i n f o r m a t i o n i s the p r o d u c t o f a l a n d use f i e l d survey which was c a r r i e d out by t h e author i n J u l y , 1970.  9.  C i t y o f Regina, Zoning By-law, 1968.  10.  C i t y o f Regina, Tax Assessment B u i l d i n g Cards.  11.  C i t y o f Regina, P r o p e r t y 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 p r i c e s o f land i n each o f the two  devel-.  oping s u b d i v i s i o n s d i s p l a y so l i t t l e v a r i a t i o n , t h a t the mean s a l e p r i c e i s assumed t o be an o b j e c t i v e i n d i c a t o r o f market value  i n these two a r e a s .  The range o f v a r i a t i o n i n the s e l l i n g  p r i c e o f l a n d 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 however i s so g r e a t , and the number o f i n d i v i d u a l s a l e s so s m a l l , t h a t i t i s deemed i n a d v i s a b l e t o assume t h a t t h e mean s a l e p r i c e is  i n d i c a t i v e o f market v a l u e .  o r ' s Department  An a p p r a i s e r  i n d i c a t e d t h a t on the b a s i s o f a p p r a i s a l s he  had made and d i s c u s s i o n s w i t h other value  appraisers,  the market  o f land 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 v a r i e d  between $500 and $900 per f r o n t f o o t . * values  i n the C i t y Assess-  depended  The v a r i a t i o n i n l a n d  p r i m a r i l y upon the l o c a t i o n o f the  property  w i t h i n the zone, and the purpose f o r which the l a n d was used was  of l i t t l e  consequence.  The minimum f i g u r e o f $500 per f r o n t  f o o t i s used as an o b j e c t i v e i n d i c a t o r o f market v a l u e f o r purposes o f comparison i n the f o l l o w i n g a n a l y s i s , t o a v o i d over estimating and t h e i r 2.  the magnitude o f v a r i a t i o n s i n l a n d assessment  values  consequences.  U n i f o r m i t y o f Land Assessment W i t h 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 The r a t e which" land' i n t h e r e s i d e n t i a T - b u s i n e s s  trans-  55  i t i o n zone i s assessed a t , as was  seen i n the p r e c e e d i n g  chap-  t e r , v a r i e s c o n s i d e r a b l y depending upon the use o f the l a n d . A p p r a i s e r s i n d i c a t e t h a t the market v a l u e o f l a n d i n the a r e a bears l i t t l e r e l a t i o n s h i p t o the e x i s t i n g use o f the l a n d . is  i n agreement w i t h the view o f land economists,  who  This  maintain  t h a t the v a l u e o f urban land i s l a r g e l y a f u n c t i o n o f i t s l o c a t i o n , and  p o t e n t i a l use as p r e s c r i b e d by l e g i s l a t i v e c o n t r o l s 2  such as zoning by-laws.  I t f o l l o w s t h e r e f o r e , t h a t assessment  r a t e s which v a r y w i t h e x i s t i n g use when compared t o an o b j e c t i v e e s t i m a t e o f market v a l u e which i s c o n s t a n t r e l a t i v e t o e x i s t i n g use, w i l l e x h i b i t a l a c k o f u n i f o r m i t y . The s t a n d a r d l a n d assessment r a t e o f $64.40 per f o o t which i s a p p l i e d t o l a n d used o t h e r than designed apartments, e s t i m a t e d market v a l u e o f $500.  for residential  front  purposes  i s o n l y equal t o 12.9%  of the  Land which i s vacant o f b u i l d -  ings and not a s s o c i a t e d w i t h commercial a c t i v i t i e s , and l a n d which i s occupied by designed apartment b u i l d i n g s i s assessed a t a standard r a t e o f $100 r a t e i s equal t o 20.0%  per f r o n t f o o t .  T h i s assessment  o f the $500 per f r o n t f o o t estimated  market v a l u e , or n e a r l y twice as h i g h as the r a t e on o t h e r r e s i d e n t i a l land.  Land which i s vacant o f b u i l d i n g s and  i a t e d w i t h commercial a c t i v i t i e s , and by b u i l d i n g s used  i s assoc-  l a n d which i s occupied  f o r commercial purposes,  i s assessed at a  c o n s i d e r a b l y h i g h e r standard r a t e o f $200 per f r o n t f o o t , or 40.0%  of estimated minimum market v a l u e . The comparison of standard assessment r a t e s as per-  56  centages of estimated market v a l u e i n d i c a t e s t h a t t h e r e i s a l a c k of u n i f o r m i t y  i n land  residential-business 3.  assessment p r a c t i c e s w i t h i n  the  t r a n s i t i o n zone.  U n i f o r m i t y of Land Assessment In The Residential-Business T r a n s i t i o n Zone R e l a t i v e To Developing R e s i d e n t i a l Subdivisions The  a n a l y s i s o f r e c o r d e d land s a l e s d a t a i n the  c e e d i n g chapter r e v e a l e d  the mean s a l e p r i c e o f land  c a i r n s u b d i v i s i o n t o be $46 p r i c e o f land foot.  The  f r o n f o o t and  i n A l b e r t Park s u b d i v i s i o n was  i n Glen-  the mean s a l e $84  per  front  standard assessment r a t e t h a t i s used f o r s i n g l e  f a m i l y r e s i d e n t i a l land 54.3%  per  pre-  i n Glencairn  o f the mean s a l e p r i c e .  The  i s $25  per  front f o o t  or  standard assessment r a t e  t h a t i s used f o r s i n g l e f a m i l y r e s i d e n t i a l l a n d  in Albert  i s somewhat h i g h e r i n a b s o l u t e terms a t $43  front foot,  per  lower r e l a t i v e t o the mean s a l e p r i c e o f 51.2%. i s a s l i g h t d i f f e r e n c e between the t h a t a r e used i n these two  nificant.  The  as t o be  mean s a l e p r i c e of l a n d i n G l e n c a i r n  Park i s assumed t o be an  rates  when expressed as  centages of the mean s a l e p r i c e , i t i s so s m a l l  but  Although there  standard assessment  subdivisions  Park  and  perinsig-  Albert  i n d i c a t o r o f market v a l u e , f o r purposes  of comparing l a n d assessment r a t e s . The that  $64.40 per  i s applied  to land  f r o n t f o o t standard assessment r a t e , i n the r e s i d e n t i a l - b u s i n e s s  transition  zone used f o r r e s i d e n t i a l purposes other than d e s i g n e d ments, i s equal t o 12.9% value.  o f the $500 per  apart-  f r o n t f o o t market  Comparing t h i s percentage w i t h the s t a n d a r d assessment  57  rates  i n A l b e r t Park and G l e n c a i r n  o f market v a l u e ,  expressed as percentages  51.2% and 54.3% r e s p e c t i v e l y , leaves  little  doubt t h a t 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 a r e a s s e s s e d a t a lower p r o p o r t i o n The  o f market v a l u e .  s i g n i f i c a n c e o f t h e r e l a t i v e l y low standard  ass-  essment r a t e , $64.40 per f r o n t f o o t , can be more r e a d i l y appr e c i a t e d by comparing i t w i t h what i t would be i f i t was the same p r o p o r t i o n  o f e s t i m a t e d market v a l u e as t h e r a t e s used i n  A l b e r t Park and G l e n c a i r n .  I f t h e non-apartment r e s i d e n t i a l  l a n d i n the t r a n s i t i o n zone i s a s s e s s e d a t the same  proportion  o f market v a l u e as i t i s i n A l b e r t Park, 51.2%, the assessment r a t e would be $256 per f r o n t f o o t o r $191.60 h i g h e r than the p r e s e n t r a t e o f $64.40 p e r f r o n t f o o t . r e s i d e n t i a l land  i s assessed a t t h e same p r o p o r t i o n  v a l u e as i t i s i n G l e n c a i r n , per  I f t h e non-apartment o f market  54.3%, the r a t e r i s e s t o $271.50  f r o n t f o o t which i s $207.10 h i g h e r than t h e e x i s t i n g s t a n -  dard r a t e o f $64.40 per f r o n t f o o t . that using  I t i s obvious  therefore,  t h e r a t i o o f assessed v a l u e t o market v a l u e as a  s t a n d a r d f o r comparison, the land  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 which i s used f o r r e s i d e n t i a l purposes o t h e r than designed apartments, i s a s s e s s e d a t a s i g n i f i c a n t l y l e v e l than s i n g l e f a m i l y r e s i d e n t i a l land  lower  i n A l b e r t Park and  Glencairn. Land t h a t i s used f o r designed apartment b u i l d i n g sites  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 i s a s s e s s e d  a t a standard r a t e o f $100 per f r o n t f o o t o r 20.0% o f the e s -  58  timated  market v a l u e  o f $500 per f r o n t f o o t .  This i s consid-  e r a b l y lower than r a t e s i n A l b e r t Park and G l e n c a i r n where l a n d i s a s s e s s e d a t 51.2% and 54.3% o f t h e market v a l u e r e s p e c t i v e l y . I f t h e land used f o r apartment s i t e s i n t h e t r a n s i t i o n zone i s a s s e s s e d a t t h e same p r o p o r t i o n o f market v a l u e as r e s i d e n t i a l land  i n A l b e r t Park, t h e r a t e i s $256 per f r o n t f o o t o r $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 t h e apartment s i t e s i n t h e t r a n s i t i o n zone a r e a s s e s s e d a t t h e same p r o p o r t i o n o f market v a l u e as t h e s i n g l e f a m i l y r e s i d e n t i a l land i n G l e n c a i r n ,  the assessment r a t e be-  comes $271.50 p e r f r o n t f o o t , an i n c r e a s e o f $171.50. vious  conclusion  t o be drawn from the f o r e g o i n g ,  The ob-  i s that  land  used f o r designed apartment s i t e s i n t h e t r a n s i t i o n zone i s a s s e s s e d a t a s i g n i f i c a n t l y lower p r o p o r t i o n  o f market  value  than the s i n g l e f a m i l y r e s i d e n t i a l land i n G l e n c a i r n and A l b e r t Park. Land t h a t i s v a c a n t o f b u i l d i n g s and i s not a s s o c i ated w i t h commercial b u i l d i n g s i s a l s o a s s e s s e d a t $100 p e r f r o n t f o o t i n t h e 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, so t h a t the p r e c e d i n g also apply  a n a l y s i s f o r apartment s i t e s and t h e c o n c l u s i o n s  to this  land.  Land t h a t i s used f o r 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 a s s e s s e d a t a somewhat h i g h e r per  f r o n t f o o t which i s 40.0% o f market v a l u e .  $200 p e r f r o n t f o o t i s a l s o employed  r a t e o f $200 This rate of  f o r land t h a t i s vacant o f  b u i l d i n g s and i s a s s o c i a t e d w i t h commercial b u i l d i n g s i t e s , so  59  t h a t the f o l l o w i n g a n a l y s i s a l s o a p p l i e s t o the land i n t h i s category.  I f t h i s land i s assessed a t the same p r o p o r t i o n  market v a l u e as the r e s i d e n t i a l l a n d the a s s e s s e d v a l u e becomes $256 per I f the  land i s assessed a t 54.3%  r e s i d e n t i a l land i n G l e n c a i r n , t o $271.50 per  front foot.  of  i n A l b e r t Park, 51.2%, f r o n t f o o t or $56  higher.  o f market v a l u e or the same as  i t i n v o l v e s an i n c r e a s e o f $71.50  On the b a s i s o f t h i s comparison i t  appears t h a t l a n d t h a t i s used f o r commercial b u i l d i n g s i t e s , and  v a c a n t l a n d a s s o c i a t e d w i t h 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 a s s e s s e d by $56,00 per  front  f o o t r e l a t i v e t o r e s i d e n t i a l land i n A l b e r t Park, and  $71.50  per  f r o n t f o o t r e l a t i v e t o r e s i d e n t i a l land i n G l e n c a i r n . In order  t o 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  p o r t i o n o f t h i s chapter, f o o t f o r land considered, developing 4.  an assessed v a l u e o f $250 per  i n the r e s i d e n t i a l -  front  business t r a n s i t i o n zone i s  to p r o v i d e a u n i f o r m assessment, r e l a t i v e to subdivisions.  Under Assessed Land V a l u e s , The  Tax  Base and  In order  the M i l l Rate  to e v a l u a t e  the consequences o f under a s s -  e s s i n g l a n d i n the r e s i d e n t i a l - b u s i n e s s zone r e l a t i v e t o developing 1970  the  s u b d i v i s i o n s , i t i s n e c e s s a r y t o compare the  tax base, m i l l r a t e , and  what they would be  the d i s t r i b u t i o n o f taxes,  i f the land was  T a b l e VI , page 60 . . Table I I i n Chapter  uniformly  H I contains  assessed.  a summary o f  the actual with See  land  60  TABLE VI Assessed Land Values 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 Using a Uniform Land Assessment Rate o f $250 per Front Foot Land Use Category  Frontage (feet)  Vacant l a n d Commercial Apartments Other r e s i d e n t i a l Total  Total Assessed V a l u e  Assessed Value per Front Foot  $  1,322 1,164 5,183 14,116 21,785  250.00 250.00 250.00 250.00 250.00  $  $  330,500.00 291,000.00 1,295,750.00 3.529.000.00 $5,446,250.00  assessment i n f o r m a t i o n f o r t h e 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 d e r i v e d from a c t u a l 1970 assessment r e c o r d s .  T a b l e VI  c o n t a i n s land assessment i n f o r m a t i o n f o r the same a r e a u s i n g the standard  $250 per f r o n t f o o t v a l u e t h a t i s assumed t o be  the same p r o p o r t i o n o f estimated  market v a l u e as assessment  rates i n developing s u b d i v i s i o n s . The  assessed  value of a l l taxable land 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 i s equal t o $1,839,310,  u s i n g t h e 1970 assessment r a t e s , and t h e t o t a l t a x base i s $213,434,710 f o r the whole c i t y .  The 1970 m i l l r a t e o f 111  m i l l s , when a p p l i e d t o t h e t o t a l t a x base, produced a t o t a l tax revenue o f $23,691,253. The  3  taxable land i n the r e s i d e n t i a l - b u s i n e s s trans-  i t i o n zone has a t o t a l f r o n t a g e o f 21,785 f e e t . land  i s assessed  a t 50% o f estimated  I f the taxable  market v a l u e , $500 per  f r o n t f o o t , as shown i n Table V I , t h e t o t a l assessed the land i n the t r a n s i t i o n i n c r e a s e i n the a s s e s s e d  value of  zone i n c r e a s e s t o $5,446,250.  value of land i n the t r a n s i t i o n  4  The zone  61  i n c r e a s e s the t o t a l t a x base t o $217,041,670. The l a r g e r t a x base i s capable o f r a i s i n g t h e same amount o f revenue as the 1970 Tax base does but a lower rate w i l l  be r e q u i r e d .  mill  The new m i l l r a t e i s c a l c u l a t e d by-  d i v i d i n g the new tax base i n t o the r e q u i r e d revenue and m u l t i p l y i n g the answer by 1000, which produces a new m i l l r a t e o f 1C9.1553 m i l l s . 5.  5  R e d i s t r i b u t i o n o f Taxes 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 The d i s t r i b u t i o n o f r e a l e s t a t e p r o p e r t y taxes 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 under the system o f assessment employed i n the C i t y o f Regina i n 1970 i s p o r t r a y e d i n T a b l e VII.. , I t i s worthy o f note t h a t the t a x on the t h r e e c a t e g o r i e s o f r e s i d e n t i a l p r o p e r t y improvements  is relatively uni-  form, whereas the t a x on the l a n d i n these t h r e e c a t e g o r i e s v a r i e s widely. improvements  The l a r g e r p r o p o r t i o n o f the t o t a l taxes on  f o r apartments r e l a t i v e t o o t h e r r e s i d e n t i a l  p r o p e r t y r e f l e c t s the h i g h e r i n t e n s i t y o f development on these sites. T a b l e V I I I shows how would be d i s t r i b u t e d  the r e a l e s t a t e p r o p e r t y  taxes  i n the t r a n s i t i o n zone when a l l o f the  l a n d i s assessed a t a u n i f o r m r a t e of $250 per f r o n f o o t , and a r e v i s e d m i l l r a t e o f 109.16 m i l l s i s used t o c a l c u l a t e the tax.  The extremely  on improvements  h i g h r a t i o o f the t a x on land t o the t a x  f o r the o t h e r r e s i d e n t i a l category,  relative  TABLE  VII  The D i s t r i b u t i o n o f Taxes W i t h 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 Using the 1970 Assessment Rates and M i l l Rate Land Use Category  Tax on Land Dollars (%)  Vacant Land  19,196  9.4  Commercial  25,027  12.3  12,034  Apartments  High-rise  Apartments Walk-up R e s i d e n t i a l Other Total  Tax on Improvements Dollars  Total Dollars  (7o)  19,196  3.2  40,559.00  65,586  11.0  5.9  110,560.00  122,594  20.5  45,980  22.5  131,630.00  177,610  29.7  101,926  49.9  110,245.00  212,171  35.6  $204,163  100.0  $392,995.00  $597,158  100.0  TABLE V I I I The D i s t r i b u t i o n o f Taxes W i t h 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 Using, a Uniform Land Assessment Rate o f $250 Per F r o n t Foot Land Use Category  Tax on Land Dollars (%)  Vacant Land  36,077  5.9  Commercial  31,766  5.3  29,500  Apartments Walk-up R e s i d e n t i a l Other  Apartments  High-rise  Total  Tax on Improvements Dollars  Total Dollars  (%)  36,077  3.7  39,887  71,653  7.4  5.0  108,728  138,228  14.1  111,945  18.8  129,446  241,391  24.9  385,225  65.0  108,419  493,644  50.1  $594,513  100.0  $386,480  $980,993  100.0  ON CO  TABLE IX Changes i n t h e D i s t r i b u t i o n o f Taxes W i t h i n the R e s i d e n t i a l - B u s i n e s s Due t o Under A s s e s s i n g Land i n the T r a n s i t i o n Zone Tax on Land Dollars  Land Use Category  (%)  Tax on Improvements Dollars  Vacant Land  -  16,881  +3.5  Commercial  -  6,739  +7.0  +  Apartments  High-rise -  17,466  T r a n s i t i o n Zone  Total Dollars  (7c)  -  16,881  -0.5  672  -  -6,067  +3.6  +0.9  + 1,832  -  15,634  +6.4  v.  Apartments Walk-up  -  65,965  +3.7  + 2,184  -  63,781  +5.0  R e s i d e n t i a l Other  - 283,299  -15.1  + 1,826  - 281,473  -14.5  +$6,514  -$383,836  Total Note:  -$390,350  The s i g n i n d i c a t e s a decrease and the "+" s i g n an i n c r e a s e .  indicates  65  to the apartments, r e f l e c t s the low f o r non-apartment r e s i d e n t i a l The that results the 1970  shift  intensity  o f development  property.  i n the d i s t r i b u t i o n o f r e a l e s t a t e  taxes  when land i n the t r a n s i t i o n zone i s assessed a t  r a t e s , r a t h e r than a t approximately the same propor-  t i o n of market v a l u e as land i n d e v e l o p i n g shown i n T a b l e XI.  Very l i t t l e  subdivisions, i s  change i n the tax on  improve-  ments i s i n evidence, w i t h o n l y a s l i g h t i n c r e a s e o f $6,514 for a l l categories.  The  i n c r e a s e i s r e l a t i v e l y evenly  over the r e s i d e n t i a l p r o p e r t y ,  w i t h a somewhat s m a l l e r  spread change  i n the tax on commercial improvements. Significant land i s shown, but  decreases i n the tax on a l l c a t e g o r i e s  the decrease i n the tax on the l a n d i n the  other r e s i d e n t i a l category i s greater r e l a t i v e terms.  The  apartment r e s i d e n t i a l  The  i n both a b s o l u t e  l a r g e r decrease i n the tax on the land i s due  r a t e o f $64.40 per f r o n t i n 1970.  to the very low  f o o t t h a t was  t o other The  non-  property  t o t a l decrease i n the tax on l a n d i n the  i n the t a x on improvements, but  and  assessment  used on t h i s  i t i o n zone of $390,350, i s o f f s e t t o some extent  is shifted  of  by the  transincrease  the net tax decrease of $383,836  property.  tax on land f o r a l l land use  Other R e s i d e n t i a l , i n c r e a s e s  c a t e g o r i e s , except  s l i g h t l y as a percentage o f  the  t o t a l t a x on l a n d i n the t r a n s i t i o n zone, whereas the tax the Other R e s i d e n t i a l c a t e g o r y decreases by 15.1%, and a r e l a t i v e s h i f t o f tax from the l a t t e r land use  on  indicates  category.  66  The  consequences o f these s h i f t s i n t h e d i s t r i b u t i o n  o f taxes a r e examined, f o l l o w i n g a d i s c u s s i o n o f how the d i s t r i b u t i o n o f taxes i s e f f e c t e d i n the o t h e r areas o f t h e c i t y . 6.  R e d i s t r i b u t i o n o f Taxes Throughout the C i t y The  c i t y o f Regina i s d i v i d e d  shown on F i g u r e  i n t o seven areas as  2, f o r t h e purpose o f examining s h i f t s i n t h e  d i s t r i b u t i o n o f taxes brought about by the p o l i c y o f underassessing zone.  land v a l u e s i n t h e 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  Areas 1, 2 and 3 i n c l u d e the predominately s i n g l e  f a m i l y and low d e n s i t y m u l t i p l e f a m i l y r e s i d e n t i a l areas o f the c i t y .  Area 4 i s almost e x c l u s i v e l y i n d u s t r i a l l a n d , and  Area 5 i n c l u d e s  a mixture o f o l d e r s i n g l e f a m i l y  new medium d e n s i t y low  density  apartments, l i g h t i n d u s t r i a l p r o p e r t y  commercial b u i l d i n g s .  D i s t r i c t contains  residences,  The C e n t r a l  the high density  Business  o f f i c e b u i l d i n g s , the major  department s t o r e s , and h i g h q u a l i t y r e t a i l s t o r e s , theatres  and r e s t a u r a n t s .  and  hotels,  The remaining a r e a i s t h e 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 which was d e s c r i b e d  i n detail  earlier. T a b l e X shows how the r e a l e s t a t e p r o p e r t y  and b u s i -  ness t a x was d i s t r i b u t e d among the seven a r e a s , and between land,  improvements and the b u s i n e s s assessment, u s i n g  land assessment r a t e s .  nated, by the 1970 m i l l r a t e o f The  the 1970  The taxes i n T a b l e X were c a l c u l a t e d  by m u l t i p l y i n g the 1970 a s s e s s e d v a l u e s i n each a r e a  desig-  111. m i l l s .  s m a l l amount o f the t a x 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 o f Taxes Using the 1970 Assessments and M i l l Rate Tax on Land Dollars (%)  Area  Tax on Improvements Dollars  T o t a l 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  1,955,323  22.3  2,580,143  4,535,466  19.1  D i s t r i c t : 1,357,486  15.5  937,715  2,295,201  9.7  204,163  2.3  392,994  597,157  2.5  8,777,832  100.0  12,344,231  21,122,063  89.2  2,569,190  10.8  $23,691,253  100.0  Central Business  Res-Bus. T r a n s . Zone Real E s t a t e T o t a l Business Tax Total  $8,777,832  100.0  $12,344,231  TABLE•XI The D i s t r i b u t i o n o f Taxes Using a Uniform Land Assessment Kate o f $250 per Front Foot 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 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  594,513  6.6  386,480  980,993  4.1  9,026,056  100.0  12,139,609  21,165,665  89.3  2.526.602  10.7  $23,692,267  100.0  Res-Bus. Trans. Zone Real E s t a t e Total Business Tax Total  $9,026,056  100.0  $12,139,609  TABLE X I I Changes i n t h e D i s t r i b u t i o n o f Taxes Due t o Under-Assessing 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 Area  Tax on Land Dollars C/o)  Land Value i n the  Tax on Improvements Dollars  Total 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  +  32,418  +  1.0  + 42,769  +75,182  +  0.3  +  22,503  +  0.7  +  15,544  +38,047  +  0.2  390,350  -  4.3  +  6,514  -383,886  -  1.6  0.0  + 204^22  - 43,60-2  + .0.1  f 42.588  0...1  5 Central Business D i s t r i c t Res-Bus, T r a n s . Zone Real Estate  Total  Business Tax  -  TOTAL Note:  -  The  248,224 248,224  0.0  + 204,622  +  1,014  s i g n i n d i c a t e s a decrease, and t h e "+" s i g n i n d i c a t e s an  increase.  71  dential-business on land  t r a n s i t i o n zone, r e l a t i v e t o the t o t a l  i n the c i t y ,  a l s o be p o i n t e d  i s of p a r t i c u l a r i n t e r e s t .  out t h a t the p r o p o r t i o n  tax  I t should  o f 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 o t h e r areas o f the T a b l e XI shows how  city.  the 1970  taxes would be  distri-  buted i n Regina, i f l a n d i n the r e s i d e n t i a l - b u s i n e s s i t i o n zone was  trans-  a s s e s s e d a t a u n i f o r m $250 per f r o n t f o o t .  taxes i n t h i s t a b l e were c a l c u l a t e d by changing the  assessed  value , o f l a n d i n the r e s i d e n t i a l - b u s i n e s s zone, a d j u s t i n g 1  m i l l r a t e t o r e f l e c t the change, and a s s e s s e d v a l u e s by the new The  then m u l t i p l y i n g  the  the  m i l l r a t e o f 109.16 m i l l s .  most s i g n i f i c a n t change i s the somewhat l a r g e r  amount o f the tax on the l a n d i n the r e s i d e n t i a l - b u s i n e s s and  The  the f a c t t h a t i t i s now  greater  than the tax on  zone,  improve-  ments . A more complete p i c t u r e o f the changes i n the bution  distri-  o f taxes t h a t are brought about by the p r a c t i c e o f  u n d e r - a s s e s s i n g l a n d v a l u e s i n the r e s i d e n t i a l - b u s i n e s s i t i o n zone can be seen i n T a b l e X I I .  The  tax on l a n d i n a l l  o f the areas o t h e r than the t r a n s i t i o n zone, i n c r e a s e amounts v a r y i n g land  between $7,113 and  trans-  by  $37,371, w h i l e the tax  on  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 t o some e x t e n t by an i n c r e a s e tax on l a n d , but  o f $6,514 i n the  the net e f f e c t i s a t o t a l d e c r e a s e i n the  72  tax on r e a l e s t a t e p r o p e r t y The  i n the t r a n s i t i o n zone o f $383,836.  $390,350 decrease i n the tax on l a n d i n the  transition  zone i s r e d i s t r i b u t e d by i n c r e a s i n g the t a x on o t h e r nents of the tax base.  The  compo-  tax on l a n d o u t s i d e o f the  trans-  i t i o n zone i s i n c r e a s e d by $142,126, w h i l e the t a x on a l l o f t h e t a x a b l e improvements i n the c i t y i s i n c r e a s e d by $204,622 and  the t a x on b u s i n e s s The  business zone, but  assessments i s i n c r e a s e d by $42,588.  p o l i c y of under-assessing  l a n d i n the  residential-  zone decreases the burden o f t a x a t i o n on l a n d i n the the burden o f t a x a t i o n 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 t o another.  The  consequences o f these  type o f  property  s h i f t s i n the burden  o f t a x a t i o n a r e examined i n the f o l l o w i n g s e c t i o n s o f  this  chapter. 7.  The Consequences of R e d i s t r i b u t i n g the Real P r o p e r t y Tax i n Regina The  Estate  f o l l o w i n g s e c t i o n s o f t h i s chapter  a r e devoted  t o an examination o f the consequences o f the t a x a t i o n p r a c t i c e i n Regina, which under-assesses l a n d i n the ness t r a n s i t i o n zone, r e l a t i v e t o other r e d i s t r i b u t e s r e a l estate property 8.  Property  l a n d i n the c i t y , ! and  taxes.  Values  A d e t a i l e d d e s c r i p t i o n o f how taxes  residential-busi-  e f f e c t property  v a l u e s was  real estate  provided  i n Chapter I I , so  t h a t o n l y a b r i e f statement i s made here to a v o i d repetition.  property  excessive  A tax. on l a n d cannot be s h i f t e d , and. i s , capitaLiz.ed„-i  73,  T h i s means t h a t an i n c r e a s e i n the t a x on l a n d d e c r e a s e s t h e value  o f the l a n d , and a decrease i n the t a x on l a n d  the v a l u e  o f t h e land t o i n c r e a s e .  causes  A t a x on improvements  however, i s n o t c a p i t a l i z e d , so t h a t i n c r e a s i n g o r d e c r e a s i n g the t a x on improvements does not e f f e c t p r o p e r t y  values.^  T a b l e IX and T a b l e X I I show t h a t t h e p r a c t i c e o f u n d e r - a s s e s s i n g l a n d 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 causes t h e t a x on a l l c a t e g o r i e s  of land i n the trans-  i t i o n zone t o decrease, w h i l e T a b l e X I I i n d i c a t e s t h a t t h e t a x on land i n a l l o t h e r areas o f the c i t y i n c r e a s e s s u l t o f the same p o l i c y .  as a r e -  Because taxes on l a n d a r e c a p i t a -  l i z e d , t h e v a l u e o f the land i n the t r a n s i t i o n zone w i l l i n crease  and t h e v a l u e  city will  o f land i n a l l the o t h e r areas o f the  decrease. T a b l e IX and T a b l e X I I i n d i c a t e t h a t t h e under-  assessment o f land i n the t r a n s i t i o n zone, causes t h e t a x on improvements t o i n c r e a s e  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 s i n c e taxes on improvements a r e not c a p i t a l i z e d , property 9.  values  a r e not a f f e c t e d .  Rents The  d e s c r i p t i o n o f r e a l e s t a t e taxes and r e l a t e d  t h e o r i e s i n Chapter I I i n d i c a t e s t h a t some economists m a i n t a i n t h a t taxes on land do not e f f e c t r e n t s because they a r e capi t a l i z e d , but taxes on improvements a r e s h i f t e d through r e n t changes and a r e not c a p i t a l i z e d . not. support t h i s theory  Although a l l economists do  i t i s assumed t o be v a l i d  f o r purposes  of a n a l y s i s .  An i n c r e a s e i n the tax on improvements i s assumed  to i n c r e a s e r e n t s , and a decrease  i n the tax i s assumed t o de-  crease rents. The decrease zone, and areas  i n the tax on land i n the  transition  the i n c r e a s e i n the tax on land i n a l l the o t h e r  of the c i t y as shown i n T a b l e XII, w i l l not e f f e c t r e n t s ,  because they are c a p i t a l i z e d  i n t o the v a l u e o f the l a n d .  The  i n c r e a s e i n the t a x on improvements i n the t r a n s i t i o n zone and the o t h e r areas o f the c i t y w i l l o f the 10.  increase rents i n a l l parts  city.  The  D i s t r i b u t i o n o f Wealth The review o f r e a l e s t a t e p r o p e r t y t a x and  t h e o r i e s i n Chapter alized land  economic  I I i n d i c a t e s t h a t a tax on l a n d i s c a p i -  i n t o the v a l u e o f l a n d , and  i s borne by the owner o f the  i n the form of a c a p i t a l l o s s as the v a l u e o f l a n d  creases.  C o n v e r s e l y , a decrease  de-  i n the tax on l a n d v a l u e i s  c a p i t a l i z e d i n t o the v a l u e of the l a n d and the owner reaps c a p i t a l gain. 11,  a  A c c o r d i n g to the t h e o r i e s d e s c r i b e d i n Chapter  a t a x on improvements i s not c a p i t a l i z e d and  i s passed  on  by the owners o f p r o p e r t y i n the form o f h i g h e r r e n t s or p r i c e s for services. i s passed  A decrease  i n the tax on improvements however,  on by d e c r e a s i n g r e n t s and p r i c e s .  The  exception  to t h i s r u l e i s the owner-occupant o f r e s i d e n t i a l p r o p e r t y i s unable  who  to pass on taxes on improvements i n the form o f h i g h e r  r e n t s , and must absorb  them.  T a b l e XII shows t h a t u n d e r - a s s e s s i n g  land value i n  75  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 decreases the t a x lard i n the t r a n s i t i o n zone and all  increases  the other areas o f the c i t y .  i s c o r r e c t , the v a l u e  i n the t r a n s i t i o n zone i n c r e a s e s and  the v a l u e  i n the other areas o f the c i t y d e c r e a s e s .  The  i n the t r a n s i t i o n zone reap a c a p i t a l g a i n and land i n other  of of  of land  owners o f  land  the oxvners o f  p a r t s o f 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 .  T a b l e XII a l s o i n d i c a t e s t h a t the t a x on ments i n a l l areas of the c i t y i n c r e a s e s .  or !borne by owner-occupants, the tax on  i s a c t u a l l y p a i d by tenants and  improve-  Because taxes  improvements are passed on i n the form o f h i g h e r prices  in  Assuming t h a t the theory  the e f f e c t s o f taxes on l a n d values land  the tax on land  on  rents,  on and  improvements  consumers.  The under-assessment o f land i n the t r a n s i t i o n zone t h e r e f o r e , r e s u l t s i n a s h i f t of wealth t o the owners o f estate property  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  from the owners o f r e a l e s t a t e p r o p e r t y the c i t y , and  real  the tenants and  i n the o t h e r areas  consumers i n a l l p a r t s o f  of  the  city. 11.  Production The  it  and  Consumption o f B u i l d i n g Space  l i t e r a t u r e review i n Chapter I I i n d i c a t e d  that  i s g e n e r a l l y accepted; taxes on l a n d do not a f f e c t the amourt  o f b u i l d i n g space t h a t i s produced or consumed. provements however, are c o n s i d e r e d on the p r o d u c t i o n o f b u i l d i n g s to  Taxes on  t o have a d e p r e s s i n g  o f b u i l d i n g space, and  im-  effect  cause r e n t s or p r i c e s  increase.  Assuming t h a t the views i n the p r o c e e d i n g paragraph  76  are c o r r e c t , t h e decrease i n the tax on l a n d i n the z o n e , and of  transition  t h e i n c r e a s e i n the tax on land i n the other  areas  t h e c i t y as shown i n T a b l e X I I , w i l l not a'ffect the amount  o f b u i l d i n g space produced or consumed.  The  i n c r e a s e i n the  tax o n t h e v a l u e o f improvements i n the t r a n s i t i o n and other  areas o f the c i t y however, w i l l decrease the amount o f  b u i l d i n g space produced and  consumed.  This analysis indicates  t h a t the p r a c t i c e o f under a s s e s s i n g l a n d v a l u e i n the i t i o n zone has  a depressing  space t h a t i s produced and 12.  the  Investment The  trans-  e f f e c t on the amount o f b u i l d i n g consumed.  Decisions  e f f e c t s that r e a l estate property  taxes a r e con-  s i d e r e d t o have on c e r t a i n types o f investment d e c i s i o n s  are  d e s c r i b e d a t some l e n g t h i n Chapter I I , and  only a very  summary o f the e f f e c t s a r e presented  Investment i n r e a l  estate property  f o r p u r e l y s p e c u l a t i v e gains  by taxes on l a n d v a l u e . and  here.  Investments i n the  is  discouraged  rehabilitation  maintenance o f e x i s t i n g b u i l d i n g s i s encouraged by  on l a n d v a l u e , and provements.  discouraged  brief  taxes  by taxes on the v a l u e o f  Re-development o f under u t i l i z e d  aged by taxes on land v a l u e , and  discouraged  im-  l a n d i s encourby taxes on  im-  provements . T a b l e X I I shows t h a t the under-assessrnent o f l a n d value  i n t h e t r a n s i t i o n z o n e decreases the tax on l a n d i n the  t r a n s i t i o n z o n e , b u t increases the  transition  other  zone, and  a r e a s ' - o-f t h e  city;  t h e tax on the improvements i n  on b o t h l a n d  and  improvements i n a l l  Assuming t h a t t r i e statements In t h e  77  p r e c e e d i n g paragraph a r e v a l i d , i t f o l l o w s t h e r e f o r e ,  that  s p e c u l a t i v e 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 o f e x i s t i n g redevelopment o f under u t i l i z e d the t r a n s i t i o n  b u i l d i n g s as w e l l as the land w i l l be d i s c o u r a g e d i n  zone.  The i n c r e a s e i n the t a x on l a n d i n the areas o f the c i t y o u t s i d e o f t h e t r a n s i t i o n zone w i l l d i s c o u r a g e s p e c u l a t i o n 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 i n c r e a s e i n the tax on improvements i n the areas the t r a n s i t i o n a r e a , however, w i l l i l i t a t i o n and re-development. counter-acting information.  outside  tend t o d i s c o u r a g e rehab-  The net e f f e c t o f these two  f o r c e s cannot be determined from the a v a i l a b l e  78  C H A P T E R  IV  FOOTNOTES 1.  K e i t h G i l b e r t , P r i v a t e I n t e r v i e w i n Regina, September, 1971.  2.  Becker, Land and B u i l d i n g Taxes, p. 16; F r e d e r i c k E. Case, Sanders, A. Kahn, and A l f r e d Schimmel, R e a l E s t a t e A p p r a i s a l and Investment, (New York: Ronald Press Company, 1963), p. 300; R i c h a r d T. E l y , and George S. W e h r i v e i n , Land Economics 2nd ed. (Madison Wise.: U n i v e r s i t y of Wisconsin P r e s s , 1964), p. 120; Weimer and Hoyt, R e a l E s t a t e , p. 176.  3.  C i t y o f Regina, F i n a n c i a l Statement. 1970, p.,84.  4.  50% o f the e s t i m a t e d market v a l u e o f $500 o r $250 per f r o n t f o o t i s assumed, to p r o v i d e u n i f o r m i t y o f assessment between the t r a n s i t i o n zone and the d e v e l o p i n g s u b d i v i s i o n s .  5.  ffjffi 04i 670 mills. In o r d e r t o s i m p l i f y c a l c u l a t i o n s a new m i l l r a t e o f 109.16 m i l l s w i l l be used. I t should be noted t h a t t h i s rounded m i l l r a t e w i l l a c t u a l l y produce more revenue than the 109.1553 m i l l r a t e , but the d i f f e r e n c e 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 o f the f o l l o w i n g 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 I I p o i n t s out t h a t t h e r e i s some disagreement as to the v a l i d i t y o f t h e s e statements, but f o r purposes o f a n a l y s i s they a r e assumed t o be v a l i d .  2  X  1  0  0  0  =  1  0  9  1  5  5  Saskatchewan,  3  79  C H A P T E R  V  A C R I T I C A L EVALUATION THE  1.  preceding chapters  erature relating study  ects  to r e a l  of Regina  chapter  and  i s examined  The  the extent  i s also evaluated  one  o f community and  The which express  of the  hypothesis  transition  district  i n Regina  more r e c e n t l y  a redistribution  This  i s ver-  any  are  work.  i n terms o f i t s s i g n i f i c a n c e  to  the  contribu-  knowledge.  Hypothesis consists  a relationship  business  area  o f a l l asp-  means o f e v a l u a t i n g t h e  r e g i o n a l p l a n n i n g , and  "Under a s s e s s m e n t  in  examination  t h a t i s made t o t h e body o f t h e o r e t i c a l  Verification  small  case  t o which the o b j e c t i v e s o f the study  The  tion  a  degree to which the hypothesis  a r e e x a m i n e d as  practice  f o r one  lit-  i n considerable d e t a i l .  to a c r i t i c a l  achieved, study  o f the  e s t a t e p r o p e r t y t a x a t i o n , and  i s devoted  of the study.  ified  c o n t a i n a review  i n which the land assessment p o l i c y  the C i t y  final  2.  STUDY  Introduction The  in  OF  between  developed  related  to the  statements  variables.  of land value i n the  zone a d j a c e n t  relative  o f two  residential-  to the c e n t r a l land assessment  residential  business practice  subdivisions results  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  in  80  the  d i s t r i b u t i o n o f economic wealth, the a l l o c a t i o n o f r e a l  e s t a t e r e s o u r c e s and development  throughout the c i t y . "  The f i r s t statement expresses a c a u s a l  relationship  between the 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 and the r e - d i s t r i b u t i o n o f the burden of the  taxation.  The comparison o f assessment r a t i o s f o r land i n  t r a n s i t i o n zone, w i t h the assessment r a t i o s f o r l a n d i n  d e v e l o p i n g s u b d i v i s i o n s i n Chapter IV, i n d i c a t e d t h a t l a n d i n the  transition  zone was  a s s e s s e d a t a lower p r o p o r t i o n o f  e s t i m a t e d market v a l u e i n 1970.  T a b l e s V I I , V I I I and IX de-  monstrate t h a t the under assessment o f l a n d i n the t r a n s i t i o n zone causes the burden o f t a x a t i o n t o be s h i f t e d from the v a l u e o f l a n d i n the t r a n s i t i o n zone, t o the v a l u e o f improvements i n the t r a n s i t i o n zone, and t o both l a n d and in  the o t h e r areas o f the c i t y .  improvements  T h i s v e r i f i e s the f i r s t  state-  ment o f the h y p o t h e s i s . 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 o f the burden o f t a x a t i o n and the  distri-  b u t i o n o f economic w e a l t h , the a l l o c a t i o n o f r e a l e s t a t e r e s o u r c e s , and development the  throughout the c i t y .  The a n a l y s i s o f  s h i f t s i n the burden o f t a x a t i o n i n Chapter IV e s t a b l i s h e s  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  distri-  b u t i o n o f taxes and the other v a r i a b l e s , but because they are not  s u b s t a n t i a t e d w i t h e m p i r i c a l evidence the second p a r t o f  the  h y p o t h e s i s cannot be f u l l y  verified.  81  3.  Achievement o f The  I are,  o b j e c t i v e s of the study as s t a t e d i n Chapter  "to p r o v i d e  reaching  some i n s i g h t i n t o the complexity and  e f f e c t s t h a t one  capable o f and  two  Objectives  generating,  and  real estate taxation policy i s to demonstrate how  e x i s t i n g economic  t a x a t i o n t h e o r i e s can be employed to examine r e a l  taxation policies  far-  f o r the purpose o f e v a l u a t i n g  estate  t h e i r conse-  quences . " The assessing  extensive  land v a l u e  r e d i s t r i b u t i o n o f taxes due  t o under  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 i n Regina t h a t i s shown i n T a b l e s VI through X I I , cates how  area o f  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 p a r t s o f  the  city.  the e f f e c t s of t a x a t i o n p o l i c y i n one  indi-  The  a n a l y s i s of the e f f e c t s t h a t these s h i f t s i n the  d i s t r i b u t i o n o f taxes have on p r o p e r t y  values,  the  distri-  b u t i o n of wealth, r e a l e s t a t e investment d e c i s i o n s and opment, t h a t i s d e s c r i b e d  devel-  i n the l a t t e r p o r t i o n s o f Chapter  IV,  i n d i c a t e s t h a t the f i r s t  o b j e c t i v e has  been a c h i e v e d .  The  f a c t t h a t the t h e o r i e s o f r e a l e s t a t e t a x a t i o n , economics,  and  p u b l i c f i n a n c e t h a t are d e s c r i b e d  i n Chapter I I a r e used  to a n a l y s e the consequences o f the p o l i c y o f under land 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 con-  f i r m s t h a t the second o b j e c t i v e o f the study has 4.  assessing  been a c h i e v e d .  The S i g n i f i c a n c e o f the Study f o r Community and R e g i o n a l Planning ' The  manner i n which our p h y s i c a l r e s o u r c e s ,  including  82  r e a l e s t a t e a r e used, and the way i n which our s e t t l e m e n t s develop to i n f l u e n c e t h e q u a l i t y o f human l i f e ,  i s of v i t a l  i n t e r e s t t o t h e p r a c t i c e o f community and r e g i o n a l Two o b j e c t i v e s o f community and r e g i o n a l p l a n n i n g  planning. are; to  a c q u i r e a g r e a t e r u n d e r s t a n d i n g o f t h e f o r c e s t h a t shape and d i r e c t the growth and development o f our s e t t l e m e n t s ;  and t o  i d e n t i f y new t o o l s t h a t can be used t o d i r e c t the development o f our communities i n accordance w i t h chosen community The  growth and development o f c i t i e s and r e g i o n s i s  l a r g e l y the r e s u l t o f a m u l t i t u d e  of private decisions  a r e based on t h e p r o f i t e x p e c t a t i o n s choices fits  goals.  that  o f investments, and the  o f consumers based on the comparative c o s t s and bene-  o f a l t e r n a t i v e types o f housing.  provided  The l e v e l o f s e r v i c e s  by l o c a l governments has i n c r e a s e d  the l a s t h a l f century,  considerably i n  and the r e a l e s t a t e p r o p e r t y  tax, which  i s t h e major source o f l o c a l government revenue, has i n c r e a s e d proportionately.  Real e s t a t e p r o p e r t y  taxes r e p r e s e n t  a cost  t o the i n v e s t o r which e f f e c t s the p r o f i t a b i l i t y o f an i n v e s t ment, and t h e t a x i s a c o s t t o t h e consumer o f h o u s i n g . t h e r e f o r e f o l l o w s t h a t taxes on r e a l e s t a t e p r o p e r t y d e c i s i o n s i n v o l v i n g the development and use o f r e a l property,  It  influence estate  and a r e o f some i n t e r e s t f o r community and r e g i o n a l  planning. The  review o f l i t e r a t u r e i n Chapter I I o f t h i s  draws together  a considerable  mation concerning  study  amount o f t h e a v a i l a b l e i n f o r -  t h e e f f e c t s t h a t taxes on land and improve-  83  merits have on the development and use  of r e a l estate.  The  a n a l y s i s of the consequences o f a t a x a t i o n p o l i c y i n one of t h e C i t y of Regina i n Chapter IV, how  e x i s t i n g economic and  i n e f f e c t demonstrates  t a x a t i o n t h e o r i e s can be used t o  evaluate p a r t i c u l a r taxation p o l i c i e s . t h i s study  provides  The  a g e n e r a l understanding  p r o p e r t y taxes, and  information i n of r e a l  estate  a b a s i c 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  be used t o formulate  tax p o l i c i e s , t o  and  e v a l u a t e new  methodology can a l s o  used as p o s i t i v e implementation t o o l s to d i r e c t growth development i n predetermined ways.  The  concerned w i t h the a p p l i c a t i o n o f theory and  contributes l i t t l e  5.  L i m i t a t i o n s o f the Study The  study may  one  study  be and  is primarily  to a n a l y t i c a l problems  to the body o f t h e o r e t i c a l knowledge.  be c r i t i c i z e d  too broad a s u b j e c t and s u f f i c i e n t depth.  part  f o r attempting  to  cover  f o r not i n v e s t i g a t i n g the s u b j e c t i n  I t would have been p o s s i b l e to examine o n l y  a s p e c t of the consequences o f 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 o f wealth i n g r e a t detail.  T h i s would have i n v o l v e d c o l l e c t i n g i n f o r m a t i o n about  the owners o f p r o p e r t y and  tenants  t o 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 h i g h e r t o lower income groups, or t h e r e v e r s e .  T h i s narrow s u b j e c t c o u l d have been examined  i n v e r y g r e a t d e t a i l and aspects all  i f a number o f other narrowly d e f i n e d  o f the tax p o l i c y were examined i n succeeding  studies,  o f t h e e f f e c t s of the t a x a t i o n p o l i c y i n Regina would  84  eventually provides  be known.  The use o f t h e broad overview approach  a g e n e r a l u n d e r s t a n d i n g o f the consequences o f the  p o l i c y t o demonstrate the methodology and p r o v i d e an a n a l y t ical  framework f o r f u t u r e , i n depth a n a l y s i s o f each  aspect  o f the p o l i c y . The  reliability  o f the study i s l i m i t e d by the s m a l l  number o f l a n d s a l e s t h a t were a v a i l a b l e t o e s t a b l i s h e s t i m a t e s o f market v a l u e .  T h i s problem was f u r t h e r aggravated by not  knowing how r e p r e s e n t a t i v e was the sample o f s a l e s . blem o f inadequate s a l e s i n f o r m a t i o n ploying professional appraisers  The pro-  can be overcome by em-  t o e s t i m a t e l a n d market  values,  but t h i s would be very expensive i f a l a r g e number o f p r o p e r t i e s are  involved. The  value  o f the study i s a l s o l i m i t e d by the r e -  l i a n c e on economic and t a x a t i o n t h e o r i e s t o e v a l u a t e  t h e con-  sequences o f t h e 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 t h e l a c k o f d e t a i l data r e g a r d i n g the economics o f development, r e a l e s t a t e investment d e c i s i o n s , and  h i s t o r i c a l r e a l e s t a t e market a c t i v i t y i n Regina, t h a t i s  required  t o f o r m u l a t e a p r e c i s e mathematical model t h a t  could  produce a q u a n t i t a t i v e e v a l u a t i o n o f the t a x p o l i c y consequences.  Real e s t a t e markets p r o b a b l y a r e s u f f i c i e n t l y unique  t h a t a d i f f e r e n t model would be r e q u i r e d t o e v a l u a t e t a x policies 6.  i n each  city.  Recommendations f o r F u r t h e r In o r d e r  to provide  Study  a q u a n t i t a t i v e a n a l y s i s of. the;.  85  consequences of t a x a t i o n p o l i c i e s , such as the one gated  i n t h i s study,  i t i s necessary  to have a p r e c i s e math-  e m a t i c a l model o f the r e a l e s t a t e market. lysis  investi-  Q u a n t i t a t i v e ana-  i s r e q u i r e d i f t a x a t i o n p o l i c i e s a r e to be used, as  p r e c i s e implementation  t o o l s f o r community and  n i n g purposes, i n a s o p h i s t i c a t e d manner.  A  regional plan-  considerable  amount of r e s e a r c h i s r e q u i r e d i n order to i d e n t i f y the n i f i c a n t v a r i a b l e s , and  formulate  models t h a t are necessary to  the p r e d i c t i v e q u a n t i t a t i v e  i f r e a l e s t a t e p r o p e r t y taxes  are  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 f o r development,  r a t h e r than j u s t as a means of r a i s i n g There i s s t i l l concerning  revenue.  a c o n s i d e r a b l e amount o f disagreement  the e f f e c t s o f r e a l e s t a t e p r o p e r t y t a x e s .  makes i t d i f f i c u l t t o convince of  sig-  t a x a t i o n i n use,  consequences and  This  tax a s s e s s o r s t h a t the system  or c e r t a i n aspects o f i t , has  should be changed.  detrimental  More r e s e a r c h i s r e q u i r e d  to e m p i r i c a l l y t e s t the c o n f l i c t i n g t h e o r i e s and remove the causes o f disagreement.  86  BIBLIOGRAPHY BOOKS Back, Kenneth, "Land V a l u e T a x a t i o n i n L i g h t o f C u r r e n t Assessment Theory and P r a c t i c e " , The Assessment o f L a n d V a l u e . E d i t e d by D a 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 o f W i s c o n s i n P r e s s , 1970. Barlowe, R a l e i g h , Land Resource Economics, Englewood N.J.: P r e n t i c e - H a l l , Inc. 1958.  Cliffs,  Becker, A r t h u r P., " P r i n c i p l e s o f T a x i n g Land and B u i l d i n g s f o r Economic Development", 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, Wis.: 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. Case, F r e d e r i c k E., Real E s t a t e , Boston: Inc., 1956.  A l l y n and Bacon,  Case, F r e d e r i c k E.; Kahn, Sanders A.; and Schimmel, A. A l f r e d , Real E s t a t e A p p r a i s a l and Investment, New York: Ronald P r e s s Company, 1963. Crawford, K. Grant, Canadian M u n i c i p a l Government, Toronto: U n i v e r s i t y o f Toronto P r e s s , 1954. 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