Do you see harm in providing cities this tool? It seems to me to be a way to give them the local option of partially or completely untaxing buildings, for everyone within their borders.

Some cities will choose to reduce the tax burden on buildings and increase the millage rate on land value.

Others will decide that it is better to keep taxing buildings and land at equal millage rates, particularly if the owners of the most valuable sites in town are active in city government, as is often the case.

But it decisions on what millage rates to use should be very local.

LVT does not treat everyone equally, that is what our current taxing system accomplishes. Hence the reasons for using the term “uniformity” in our Constitution. We would be making the personal preferential decision that “Jim” does not know how to use his land efficiently if he has not built a building and if we tax him high enough he will be forced to sell it to “Tom” who will build us a building. Again, I would prefer that we build up Bricktown more than it is, but it is too big of a leap for me to force that personal preference into law.

Based on the information from the downtown website of Harrisburg, PA, there does not appear to be a consensus that an LVT system is the reason for any urban renewal. It seems more likely that the downtown beautification projects and other implemented measures are the reasons for their current downtown success. There can certainly no consensus among analysts that an LVT system would lead to a Bricktown full of occupied businesses and successful entrepreneurs.

Additionally, a constitutional change sounds fairly easy to accomplish in CT, but Oklahoma requires a 2/3 vote of the entire state and I would imagine that you would have few takers when the change is to theoretically enhance the chances of building in Bricktown, a small part of Oklahoma City. I would forsee some serious issues and concerns that would undoubtedly arise from those outside of Oklahoma City. If anything, we should take it as a source of pride that Bricktown has become a such a destination that people think it is a good investment. It seems like a better solution is to use more tried and true methods for business/urban growth than revamping our state’s Constitution, tax code and tinkering with private land ownership. I’m not sure how those methods can be classified as Ponzi schemes though, we have used them now in TIF and BID districts to significant success.

Connecticut currently has two bills in its legislature to permit LVT in its cities. Pennsylvania has had the enabling legislation for nearly 100 years, and several of its cities and towns use LVT to good effect. Click on the link associated with Joshua Vincent’s name, above, to learn more.

Improving it creates housing, or commercial spaces, or some combination of them; which it will be depends on local zoning and the local market. Sometimes it will be the beginning of a neighborhood’s transition, if it is centrally located and the community is growing. In my city of 120,000, there are places where, in the 30 years I’ve lived here, single family homes got divided into multiple apartments, then were torn down and replaced with townhouses which provided owner-occupied homes for several families where 30 years ago, only one lived. And I know that some of the midrise office buildings occupy land which 30 years ago were the sites of single-family homes that had been subdivided into small offices. And in the place where I grew up, the same thing has happened; newcomers might not realize that the well-located buildings hadn’t always been there and had been preceded by single family homes.

If our taxes are going to penalize something, I don’t think it should be productive activity, like work, or sales, or building or maintaining a building. I’d much rather place our taxes on the land value; the only thing that gets discouraged by a tax on land value is speculation in land.

In general, we do better if we align the incentives with where we want to go, and if we treat everyone similarly. “Special” programs favor some over others, and require others to subsidize some — robbing Peter to pay Paul; a sort of a Ponzi scheme, which by definition has its limits. Wise tax policy treats us as equals, and puts us on an equal footing with each other; land value taxation seems to me to be the wisest of the wise!

I agree that the outcome of immediate affluent construction followed by relocation is unlikely, but this tax system could very well just create a different real estate bubble. Do we really want buildings to be built, just for the sake of building them? It seems that this sets Bricktown up for a myriad of constructed buildings which could very well remain vacant after they are built. Seems like we have enough of those as it is. I would be more in favor of increased incentives to bring businesses, residences, retail, etc. to Bricktown, rather than set up a potential punitive tax structure. If we prefer to eliminate the uncertainty that goes along with private land ownership, we should just have the property seized by eminent domain and build public buildings (I doubt many are in favor of this position though).

I also highly doubt that this tax system would be legal under current Oklahoma law. Article X Section 5 of the Oklahoma Constitution currently requires that all real property taxes “shall be uniform upon the same class of subjects,” i.e. you can not have a different tax rate for one part of real property from another. Thus, since land and buildings are all considered real property, you can not have a differing tax rate for the two. This is codified in Title 68, Chapter 1, Article 28, Section 2803. I am not in favor of changing the Oklahoma Constitution just for the sake of potentially encouraging development in Bricktown, as much as I would like to see more construction.

Let’s discuss additional/differing incentives for Bricktown if we would like to see increased development–a special TIF structure for additional public projects to bring additional people and businesses to Bricktown or implement a localized version of the Oklahoma Jobs program, all thereby increasing developmental desire to build. I would love to see a world class museum in the Bricktown area (although I love Science Museum Oklahoma, moving it to Bricktown and making it the quality of, say, the Boston Science Museum would be great). I appreciate the outside-the-box thinking, but this tax system does not seem to be the way to go.

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Mr. Hill -

First, thanks for bringing this up and now making it a part of a broader dialogue. I must say that the quote from ‘Market Urbanism” above is completely missing the point:

“This either means they’ll build smaller in anticipation of the glut of new development, or vacancy rates will be much higher. ”

In truth, the Market Urbanism quote actually confirms Hudnut’s point – he says, “…they will build…” Who cares if they are building smaller buildings than they might otherwise at some point decades down the road. The problem in downtown Oklahoma City – and many other cities like it – is not that we don’t have enough big buildings, and certainly not that we have too many small buildings, the problem is that we don’t have enough buildings of any size…BUT we have plenty of vacant land and too many surface parking lots – both problems that Hudnut’s proposal would certainly address.

As for the immediate changes in the market, a similar scenario would be true anytime regulations are changed. If we have an opportunity to improve the tax code so that it makes the real estate market more efficient and improves our cities, we should not allow a fear of initial market correction deter us from doing so. Further, this can be addressed by staging in the tax code change to create a more gradual shift in the market. We don’t have to remain prisoners to the policies and tax-codes of yesterday.

The best real estate economist in the world know this works, Henry George knew this worked, but wealthy property speculators are – and have always been – more difficult to convince!

For more info on Land Value Taxation (LVT), check out: http://www.urbantools.org/

In Philadelphia, the proposed land value tax is shows a great decrease for the row home blocks of the older neighborhoods.

Harrisburg’s Mayor Steve Reed (US Mayor of the Year 2006) asserts that the land value tax has turned the empty downtown into a place of thriving activity, while shifting the burden of taxation away from organic neighborhoods. to preserve the character of these older cities, a program that supports rehabilitation of existing buildings is paramount.

I think evidence should trump assertion.