Traditional development

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Traditional development

Post by Pointedstick » Sun Nov 27, 2016 1:16 pm

There's great post up at granolashotgun today:

https://granolashotgun.com/2016/11/27/going-sideways/
They also explain why our post World War II development pattern is proving to be a fatally flawed insolvent and unstable experiment. And they show us how we can get back to a steady footing again with a return to traditional communities. But there’s a problem… As a society we’re too emotionally invested in the strip mall and cul-de-sac landscape we’ve built. We can’t imagine what anything else would look like. People immediately panic and envision communist style high rise concrete towers and impoverished ghettos. No one ever pictures a classic Norman Rockwell Main Street neighborhood – which is currently illegal to build.

In the past I’ve attempted to implement a Strong Towns approach to property using incremental development techniques. I bought a small one story home for example and attempted to make it a two story home. That ended poorly. I attempted to take a little house in a small town and build a modest granny cottage in the back half acre. That plan crashed and burned. It doesn’t work. Society on every level has no tolerance for any of it. Full stop. So we’re going to continue to do more of what we’ve been doing for the last several decades and it’s going to fail of its own dead weight. I’ve made peace with that reality.
[...]
And third, a lot of the suburban environment that was never particularly good to start with will be abandoned and become the new slums. Part of me loves these clusters of empty buildings because they have so much potential to be reinvented at a very low price point. But the current raft of regulations and social prohibitions makes it impossible to do much with these places. So they’ll just continue to delaminate and crumble. Invest and proceed accordingly.
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Re: Traditional development

Post by Kriegsspiel » Thu Dec 01, 2016 8:10 am

He's really been on a roll lately.
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Re: Traditional development

Post by I Shrugged » Thu Dec 01, 2016 4:45 pm

I don't see anything which will reverse the trend of suburban sprawl. And I don't see what supports the doom & gloom in the linked blog.

I would love to be in a walkable place with stores and restaurants nearby and such. My kids have lived in big city residential neighborhoods, so I've seen it. It's cool, but it's expensive, crowded, and there is a lot more crime than in the suburbs. People have voted with their SUVs and wallets. They want a biggish house on 1/4 acre, with room for their pool and all the kids' stuff, in a safe area with good schools, and easy access to the interstate highway. The horse left the barn. The ship has sailed. The genie is out of the bottle.

Meanwhile PS, if a person is retired or can otherwise be very selective, he/she can do what you have done. I admire it.

========
Sorry, I don't mean to sound preachy. I just find these ideas to be pie in the sky. They would require very heavy-handed efforts to dissuade people from having what they want. Better for an individual to avoid this freedom trap, and do what he/she wants.
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Re: Traditional development

Post by Mountaineer » Thu Dec 01, 2016 5:36 pm

I Shrugged wrote:I don't see anything which will reverse the trend of suburban sprawl. And I don't see what supports the doom & gloom in the linked blog.

I would love to be in a walkable place with stores and restaurants nearby and such. My kids have lived in big city residential neighborhoods, so I've seen it. It's cool, but it's expensive, crowded, and there is a lot more crime than in the suburbs. People have voted with their SUVs and wallets. They want a biggish house on 1/4 acre, with room for their pool and all the kids' stuff, in a safe area with good schools, and easy access to the interstate highway. The horse left the barn. The ship has sailed. The genie is out of the bottle.

Meanwhile PS, if a person is retired or can otherwise be very selective, he/she can do what you have done. I admire it.

========
Sorry, I don't mean to sound preachy. I just find these ideas to be pie in the sky. They would require very heavy-handed efforts to dissuade people from having what they want. Better for an individual to avoid this freedom trap, and do what he/she wants.
1/2 acre. ;) The only problem with smaller houses in my area is you also get crappy neighborhoods (crime, drugs, vandalism) with the smaller house and smaller lot. Oh well ...... There is always a utopian out there somewhere.
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Re: Traditional development

Post by Pointedstick » Thu Dec 01, 2016 5:40 pm

It's already reversing, and the culprit is accounting! As the author points out, low-density suburban development is not capable of raising enough tax revenue to support the municipal services that supply the development. This has been a problem since day 1; it's a known quantity, but it has nonetheless never been solved. The two most popular pseudo-solutions have been impact fees and municipal debt.

Impact fees charge developers lump sum fees for building and incentivize more development, but it's a ponzi scheme; if it ever stops, the money stops rolling in and infrastructure deteriorates. And because the new development is likewise revenue-negative, this only increases the scale of the problem.

Municipal debt can paper over the shortfalls, but burdens the city government with ever-escalating interest payments--and property owners with ever-escalating property tax bills--because revenues will never match expenditures.

I see this happening in my own city. And the city I grew up in. And virtually every other one in America. It's just dollars and cents. If your model of local development costs more than it brings in, eventually something's gonna have to change.
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Re: Traditional development

Post by Pointedstick » Fri Dec 02, 2016 9:47 am

MangoMan wrote:
I Shrugged wrote: I would love to be in a walkable place with stores and restaurants nearby and such. My kids have lived in big city residential neighborhoods, so I've seen it. It's cool, but it's expensive, crowded, and there is a lot more crime than in the suburbs. People have voted with their SUVs and wallets. They want a biggish house on 1/4 acre, with room for their pool and all the kids' stuff, in a safe area with good schools, and easy access to the interstate highway. The horse left the barn. The ship has sailed. The genie is out of the bottle.
^this
In fact people DO vote with their wallets to live in walkable areas--that's why they are so expensive, as you rightly point out. It's simply a market signal that there's an undersupply problem.

The expense and frequent crime problems faced by residents of these neighborhoods are primarily by-products of poor government policies. Allow the supply to increase and most of the problems vanish.

"big city residential neighborhood" is the wrong model to visualize. I don't particularly like living there, either. But, as I have written before, it is absolutely possible to have a walkable low-crime neighborhood full of single-family homes and good schools. I know because I live in such a place! I have half an acre and live in a single-family house, yet I can easily walk to two supermarkets, three banks, two pharmacies, a park, more than a dozen restaurants, two hardware stores, and a whole bunch of other interesting and useful places. It is lovely, but the walkability was mostly by accident. The place was clearly designed for cars, not people, because you need to cross an 8-land state highway to get there--something I'm always willing to do but that my wife subconsciously avoids, especially when she's bringing the kids (Nathan Lewis has written extensively about female aversion to the dangers of traffic as a pedestrian here). As a result, she was driving the half-mile from the commercial center to home when three weeks ago she was hit by a car while making a left turn onto the state highway that runs through the commercial district. Nobody was hurt, but our car was totaled, destroying thousands of dollars worth of value and hundreds of pounds of precious natural resources.

It's a simple failure of city planning and urban design--both government policies. There is absolutely no reason for an 8-land state highway to bisect a commercial district and separate most of it from nearby residential neighborhoods. It should run around the periphery, if it has to be there at all. It's bad for pedestrians: the roaring traffic makes them nervous. It's bad for motorists: slow local traffic merging onto fast highway traffic without onramps (no room) is a dangerous mix. And it's bad for businesses: there's no protection from the traffic; out-of-control cars can and do crash into buildings and the diminished pedestrian traffic depresses sales.

These are purely government-created problems. Americans don't prefer state highways to run through our downtowns. That's just the way a defective city planning board did things decades ago and now we're stuck with it because change is scary. But we already have a cultural pattern for walkable, conservative, low-crime towns with good schools and still enough room to spread out with modest single-family homes: the "main street" model of yore. It's not some weird experiment. It's simply returning to a model that worked for hundreds of years, with a few tweaks: scale back zoning, optimize the streets for pedestrians instead of vehicles (back then it was carriages, today it's cars), and focus on revenue-positive development.
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Re: Traditional development

Post by WiseOne » Fri Dec 02, 2016 11:57 am

Ironically, what you're describing is very common among frumpy old towns that existed before the automobile era. Teaneck, Tenafly, Westwood, and Ridgewood in Bergen County, NJ, Dobbs Ferry and Irvington in Westchester County NY, and Nyack and Piermont across the river in Rockland county, are like that. Homes in these towns are in very high demand. Property taxes are through the roof though. There are many reasons for that, but a big one is public employee pensions.

The common ingredients are old, mostly small homes on small lots with some larger uber-wealthy residences mixed in, main streets with local businesses, and commuter rail access. The shops had fallen by the wayside a while back (think grubby old mom and pop store with overpriced clothing in the window you wouldn't wear in ten million years), but there's been something of a resurgence. And these towns are defending their walkable lifestyles by resisting efforts like widening highways.

It's nice to know that there are some modern, new developments out there that are following that old-style pattern.
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Re: Traditional development

Post by barrett » Sun Dec 04, 2016 8:49 am

WiseOne wrote:Ironically, what you're describing is very common among frumpy old towns that existed before the automobile era. Teaneck, Tenafly, Westwood, and Ridgewood in Bergen County, NJ, Dobbs Ferry and Irvington in Westchester County NY, and Nyack and Piermont across the river in Rockland county, are like that. Homes in these towns are in very high demand. Property taxes are through the roof though. There are many reasons for that, but a big one is public employee pensions.
I was talking to a guy recently who had recently looked at places in Nyack. He said that property taxes on a $500,000 house were in the $25,000 range. Ouch!

I'm in a CT town (most of the time) that has the financial issues PS is highlighting. There is too little revenue generated each year apart from property taxes. So, from the time when we arrived in early 2008, property taxes have jumped from about 2% of a home's value to at least 3% today. It seems that everyone is eyeballing everyone else and trying to time when to get out. Neighbors of ours just sold their home for $310,000. It was purchased in 2006 for $440,000. I believe that home prices are never coming back here and that the only thing preventing a mass exodus is that there are so many other places in the same boat.
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Re: Traditional development

Post by WiseOne » Sun Dec 04, 2016 10:18 am

Wow Barrett, that is interesting news. Is that spectacular drop in home prices because of property taxes? The increases everywhere around here have been breathtaking. Taxes have gone up 10-20% per year in the city since 2008, depending on how the city sets property values each year which is somewhat capricious.

I was curious about the cause of high property taxes a while back and had done a little investigating. I'm not sure the spread-out nature of suburbs is a major factor. The biggest expenses are schools (teacher salaries & pensions), municipal employees (PENSIONS again), and the "tax" paid to the county. The county tax supports the municipal court system, county roads etc, but the biggest ticket item is...Medicaid and welfare, things like food stamps and homeless shelters.

That's when I got seriously interested in the role of illegal/unskilled immigration. There is a correlation between property taxes and quality of schools, but at least as big a correlation with services provided to this rapidly expanding underclass.
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Re: Traditional development

Post by Pointedstick » Sun Dec 04, 2016 11:01 am

Property taxes are indeed the elephant in the room. They have risen unbelievably quickly in most parts of the USA over the last 10 or 20 years. For all the complaining we like to do about high-tax Europe, this is a problem they largely don't have. I was talking to some Irish colleagues of mine last year and they were just appalled by our property taxes. They were all paying something like 200-400 Euros a year on their houses and condos.

My town just approved a major road rebuild project (that's on my mind because the construction blocks the most convenient path out of my neighborhood :) ). About one mile of roadway is being torn up and re-done at the cost of a little over $938,000. I am highly familiar with all aspects of the project and it's just a tragedy that highlights the nature of the problem faced by American cities. To wit:

- The road surface was asphalt and is being replaced with new asphalt--in fact, a thinner top layer (2 inches instead of the 3 inches they removed) to save money. It's just gonna need to be re-done again in 20 years, or maybe even 15.

- In addition to the road surface, the sidewalks and ramps were re-built, too, for absolutely no reason. Nobody ever walks on them! I mean, I do, but I'm weird; they are exceptionally low-traffic sidewalks. So why was this done? ADA compliance. I don't believe any Americans with disabilities have ever actually used that the sidewalk; they get driven from place to place using the County-provided shuttle service. But even so, my wife and I often simulate using them as wheelchair-bound people by walking on the sidewalks with our kids in cheap, crappy strollers that have small wheels that make you feel every bump. We never had a problem.

- In order to accommodate the heavy machinery necessary for the project, the work crew had to dig up dozens of trees that previously separated the road from the sidewalk. The empty spaces are being re-landscaped with xeriscaping: decorative rock and gravel. Now pedestrians have no shelter from the sun in summer or feeling of separation from vehicle traffic year-round. I expect pedestrian traffic to actually decrease from its prior meager levels.

- The project is paid for by a property-tax-backed bond authorized by a public referendum that passed largely because it was advertised not to raise anyone's property taxes. But wait, how can you issue a bond and not raise taxes? Easy, they timed the new bond issuance to coincide with the retirement of a prior bond. So instead of beginning to dig itself out from under the pile of municipal debt, the town used it as an advertising opportunity to issue new debt. 38% of my property tax bill is debt service across all levels of government.


If you don't like seeing your property taxes (and rent! Who do you think pays those property taxes?) go up forever, it's in your interest to think about this kind of thing.
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Re: Traditional development

Post by Pointedstick » Sun Dec 04, 2016 11:29 am

Following WiseOne's idea, I just looked at my county and city budgets.

At the county level, by far the largest single expenditure is debt service, followed by prisons, roads, and senior citizen programs (they can't drive on all these roads that the county builds for people like me, so the county pays for shuttles to drive them around). After that we have construction and building maintenance, landfill costs, EMS/fire department, and only then health-based welfare programs (hidden under the term "indigent claims").

At the city level, the biggest cost centers are schools (50%), utilities (14%), debt service (10%), police (9%), and fire department (5%). Public works is only 4%, but most of that stuff gets paid for by debt, so if you combine that with debt service, they make up about as much as the utilities budget. And the utility costs are so high because of how spread out everything is and how shoddily it was originally constructed. All the water mains are leaking, and replacing them with something better entails tearing up roads.

But the real scandal is school funding. It's the same thing at the state level: 42% of New Mexico's budget goes to education. And New Mexico has terrible educational outcomes compared to other states. Even more than roads and welfare, the elephant in the room regarding costs are these public schools. They're money pits that for the most part haven't demonstrated improving outcomes in generations.

Part of that may be increased costs to deal with kids from broken homes, who are abused, malnourished, don't speak English, have no parental attention or support, etc. And I would believe that. Elizabeth Warren talks about this in her book The Two-Income Trap which basically demolishes the idea that having two parents working is ever a good idea.
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Re: Traditional development

Post by Kriegsspiel » Sun Dec 04, 2016 2:08 pm

You know, those surprise "extra" bills and property tax increases have had me thinking recently about just not buying another house. It seems like you need to interview the surrounding property owners to see what they really pay. Even on my house, additional fire, police, and another extra charge I don't remember added like 50% to the property tax bill. Extra school bonds add even more, and I saw in the local papers they want to build completely new fucking schools when they have nearly perfectly serviceable buildings that people have been going to school in for a long time now.

But anyways, I hadn't known there was extra shit attached to a property tax bill. It never occurred to me that property taxes aren't comparable in different places. Now I'm also concerned about states' levels of debt, since (I assume) they'll just raise taxes to pay that down at some point, and I want to be able to just leave without taking a hit on home values.

Mark Leavy's got it down.
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Re: Traditional development

Post by Pointedstick » Sun Dec 04, 2016 2:57 pm

It's safe to assume your property taxes will double or at least increase from what's listed after you buy the house. This is very regionally-specific, but in most places, property tax increases are capped or limited for existing owners, but when a house is sold, it's re-appraised and the property taxes updated accordingly. So if you see a house that has a listed property tax bill of $1,000, that's what the owner is paying after many years of living there and not bearing the full brunt of the tax increases. After you buy it, they'll jack the taxes up to $2,000.

Places without these kinds of policies tend to be the ones where property taxes continuously increase for existing owners, to the point where you're paying $5-10k a year on a reasonable house.

Property taxes are the hidden tax nightmare in the USA that most people don't think about. It's why The Rent Is Too Damn High.

Although I'm at least a little happy because my bill is actually going to decrease by $200 next year! Last month we narrowly repealed a property tax charge that was directly subsidizing two local for-profit hospitals that are doing just fine.
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Re: Traditional development

Post by I Shrugged » Sun Dec 04, 2016 7:24 pm

I don't think property taxes are a factor in whether or not suburbs are sustainable, or for traditional development.

The thing that dooms traditional development today is the retailing paradigm. People shop at big box stores, by choice. Given the choice, they shop at Lowe's, not Jerry's Hardware. Obviously there can't be big box stores in walking distance to most homes.

Maybe this will change in the age of Amazon etc. But I doubt it.
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Re: Traditional development

Post by dragoncar » Sun Dec 04, 2016 8:56 pm

Impact fees - These can work if the fees are large enough to support a SWR equal to the revenue needed to pay for services, right?
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Re: Traditional development

Post by Pointedstick » Sun Dec 04, 2016 11:26 pm

dragoncar wrote:Impact fees - These can work if the fees are large enough to support a SWR equal to the revenue needed to pay for services, right?
Yes. But those would be comically huge ($50k+) in areas with low real estate prices. They would dwarf other development costs and reduce the draw of low prices.
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Re: Traditional development

Post by rickb » Mon Dec 05, 2016 12:17 am

Pointedstick wrote:Following WiseOne's idea, I just looked at my county and city budgets.
But the real scandal is school funding. It's the same thing at the state level: 42% of New Mexico's budget goes to education. And New Mexico has terrible educational outcomes compared to other states. Even more than roads and welfare, the elephant in the room regarding costs are these public schools. They're money pits that for the most part haven't demonstrated improving outcomes in generations.
I'm sure Turnip's choice for Secretary of Education will fix this. I mean, taking money away from public schools and putting it in the hands of private, Catholic, schools (or even worse, private charter schools run by millionaires treating students as sources of guaranteed income and looking to become billionaires) will certainly help. Right?

I'm thinking I should create a charter school chain for devotees of the Spaghetti Monster. It's high past time we indoctrinate children with the TRUTH goddammit.
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Re: Traditional development

Post by barrett » Mon Dec 05, 2016 7:00 am

WiseOne wrote:Is that spectacular drop in home prices because of property taxes? The increases everywhere around here have been breathtaking.
I would say that the high property taxes have served to help keep prices from rebounding after 2008-2010. Around 2011, there was a town-wide assessment done. Housing values had been chopped by about a third but the town just upped the mill rate so that there was virtually no change in overall revenue.

To one of the points in the original article that PS linked, if I walk around my neighborhood, I see driveways with several (as in 5-6) cars in them. I had been thinking that this trend was just overconsumption but, duh, it's much more likely that these are multi-generational or multi-family homes now. There's a humble abode (1,200-ish square feet) just a few houses down from me that sold last year for maybe $160,000. I went by there yesterday and there are five cars parked in front... three are in the tiny driveway and two others are just right up on the lawn in the front yard. The lot is, at most, 1/5th of an acre. There is virtually no possibility of walking to any stores here unless one is an athlete and can dodge traffic. The town is very hilly and the sidewalks end abruptly upon leaving our little subdivision. But, to the point in the article, this is what "population density" looks like here.
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Re: Traditional development

Post by WiseOne » Mon Dec 05, 2016 8:02 am

Pointedstick wrote:Following WiseOne's idea, I just looked at my county and city budgets.

At the county level, by far the largest single expenditure is debt service, followed by prisons, roads, and senior citizen programs (they can't drive on all these roads that the county builds for people like me, so the county pays for shuttles to drive them around). After that we have construction and building maintenance, landfill costs, EMS/fire department, and only then health-based welfare programs (hidden under the term "indigent claims").

At the city level, the biggest cost centers are schools (50%), utilities (14%), debt service (10%), police (9%), and fire department (5%). Public works is only 4%, but most of that stuff gets paid for by debt, so if you combine that with debt service, they make up about as much as the utilities budget. And the utility costs are so high because of how spread out everything is and how shoddily it was originally constructed. All the water mains are leaking, and replacing them with something better entails tearing up roads.
It looks like the causes of high property taxes differ from place to place, even if the end result is the same. Here in the NY/NJ area, the suburbs are pretty well packed so we don't have the spread-out issue that you have in New Mexico. But, it seems your costs for indigent care/welfare are far lower. I don't think we have more people in need than you do, just that NY & NJ likes to cater to them at the local level.

I wonder how much of these costs are driven by the ADA. I watched a 60 minutes episode last night on "drive-by lawsuits" where lawyers are driving past businesses to spot ADA infractions, or even using Google Maps to do so, and filing hundreds or even thousands of lawsuits a year. They're usually targeting the small businesses that don't have a prayer of meeting all the thousands of ADA rules. The business owners interviewed reported how much it cost them to fix the infractions, which were things like a mirror having to be exactly 40 inches (not 39 or 41 inches) above the floor.

I hope the ADA is on the Trump team's radar....it's a disaster. It would be ironic indeed if elderly people (who are often the "disabled" that the ADA is presumably supposed to help) are being forced from their homes due to high property taxes, caused in part by the ADA.
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Re: Traditional development

Post by flyingpylon » Mon Dec 05, 2016 11:01 am

In Indiana, residential property taxes are capped at 1% of the gross assessed value. I'm not sure if there are other states with caps.
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Re: Traditional development

Post by Cortopassi » Mon Dec 05, 2016 11:25 am

Other than being Illinois with all its problems to start with, there are two things that would push me out:

--RE Taxes
--Winters

RE taxes in my current house have gone up ~3.8% a year (average) since I bought in 1997. From $4700 to near $10k.

I suppose the yearly increase is not that huge, but there are big bumps along the way, which will happen again this coming year because we were just reassessed. And I am taking advantage of the good schools with my girls. But having to shell out probably in the neighborhood of $15-20k/year by retirement time just in taxes is going to be too much of a burden. Either moving or serious downsizing.
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Re: Traditional development

Post by Kriegsspiel » Mon Dec 05, 2016 12:22 pm

barrett wrote:
WiseOne wrote:Is that spectacular drop in home prices because of property taxes? The increases everywhere around here have been breathtaking.
I would say that the high property taxes have served to help keep prices from rebounding after 2008-2010. Around 2011, there was a town-wide assessment done. Housing values had been chopped by about a third but the town just upped the mill rate so that there was virtually no change in overall revenue.
This is exactly what I meant I was leery of!
flyingpylon wrote:In Indiana, residential property taxes are capped at 1% of the gross assessed value. I'm not sure if there are other states with caps.
This sounds like something good to research. I assume there is nothing to stop them from using levies and bonds to get more money from property owners, or is there?
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Re: Traditional development

Post by WiseOne » Mon Dec 05, 2016 1:07 pm

Kriegsspiel wrote:
flyingpylon wrote:In Indiana, residential property taxes are capped at 1% of the gross assessed value. I'm not sure if there are other states with caps.
This sounds like something good to research. I assume there is nothing to stop them from using levies and bonds to get more money from property owners, or is there?
The caps aren't enough to stop out of control property taxes. All they have to do to raise the desired amount of revenue is to increase the assessed home values. Whether real estate prices have gone up or not is entirely immaterial.

New York State has a cap that limits the increase of actual property taxes, but I am guessing that loopholes will be created as soon as they are needed. The cap exempts New York City of course.
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Re: Traditional development

Post by flyingpylon » Mon Dec 05, 2016 3:30 pm

WiseOne wrote:
Kriegsspiel wrote:
flyingpylon wrote:In Indiana, residential property taxes are capped at 1% of the gross assessed value. I'm not sure if there are other states with caps.
This sounds like something good to research. I assume there is nothing to stop them from using levies and bonds to get more money from property owners, or is there?
The caps aren't enough to stop out of control property taxes. All they have to do to raise the desired amount of revenue is to increase the assessed home values. Whether real estate prices have gone up or not is entirely immaterial.
While it's true that the county could increase the assessed values, in reality it hasn't been an issue at all in the 13 years I've owned my home.

We do seem to have bond issues for the schools every 2-3 years but they get voted on independently and pass easily every time. The need for bonds is related more to the fact that the city is growing rapidly and the state's funding formula is screwy. As a parent with school-age kids, I don't have a problem with bonds for the schools especially since the added taxes are quite small.
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Re: Traditional development

Post by dragoncar » Tue Dec 06, 2016 1:03 pm

All you had to do was buy in CA a couple decades ago. Taxes generally limited to 1% of assessed value, and assessment increases capped at 2% per year. Part of why our income taxes are high, but it's a good deal once you retire
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