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UBC Theses and Dissertations

The effect of rezonings on property values : a theoretical and empirical examination of the taxation of land value increments attributable to rezonings in the City of Vancouver, B.C. Tunnicliffe, Kenneth William

Abstract

In any well-developed urban area where building sites are in relative inelastic supply, rezonlngs from one type of permitted land use to another become an important factor In the supply of urban sites. As a result, rezonings can favorably or adversely affect land values depending upon the type of rezoning. Aside from Federal capital gains legislation, no other taxation legislation attempts to tax away property value increases that result from rezonings, the increases accruing to property owners or developers, not necessarily through any direct action of their own. Since, in Vancouver, the power to rezone is at the discretion of the Vancouver City Council, this increase in value is a result of public policy and could therefore be taxed accordingly. It is the purpose of this thesis to examine the theoretical, historical, and empirical aspects of the taxation of land value increments that result from rezonings. The term which is used throughout the thesis to denote such a taxation scheme is "betterment levy", a term consistent with much of the literature on the subject, especially that of British origin. Based upon a background of urban land theory and the practical legislative experiences of other areas, notably the United Kingdom, an empirical analysis is carried out on the effects of rezoning on land values in the City of Vancouver. A total of 529 properties were selected for study which represent 267 properties of various types which were rezoned during the period 1966-1972 and, as a control group, 262 properties which were not affected by rezonings during the same time period. Assessed values, using the general roll, which are available for each property and which are adjusted to reflect non-arm's length property transactions were used as the value base. "The statistical technique employed for data analysis was regression analysis. Essentially three analyses were undertaken: to determine the relationship between assessed and market values, to determine the overall effects of rezoning on property values, and to determine the effect of specific types of rezoning on value. Basically, the results showed a close relationship between assessed and market values, the overall importance of rezonings on property value, and, most significantly, the importance of the specific type of rezoning on value. Finally, the implications of these findings and the recommendations and limitations derived therefrom are presented as a guide to policy-makers in applying the results to possible policy decisions.

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