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Chapter 4

Chapter 4. Public Restrictions on Ownership Rights. Four Basic Powers of Government Over Real Estate. Taxation Escheat Eminent domain Police power (includes zoning). Property Tax. “ad valorem” tax millage rate exemptions

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Chapter 4

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  1. Chapter 4 Public Restrictions on Ownership Rights

  2. Four Basic Powers of Government Over Real Estate • Taxation • Escheat • Eminent domain • Police power (includes zoning)

  3. Property Tax • “ad valorem” tax • millage rate • exemptions • The tax bill for a property in the DFW area with a market value of $100,000 and a municipal tax rate of $0.60 per $100 valuation is calculated as follows: Market Value $100,000 Divided by 100 / 100___ $1,000 times tax rate x 0.60__ equals Property Tax $600.00

  4. Administering the Property Tax • First step, identify all properties and estimate their values • Second step, develop a budget and tax rate. • The budget is determined by the appropriate government officials based on the costs of providing government services to the community (police and fire protection, schools, libraries, street, etc.) • Dividing the budget amount by the tax digest (total value of properties in the jurisdiction) yields the tax rate necessary to generate the budget amount. • Third step, bill the property owners and collect the taxes.

  5. Tarrant County Property Taxes • Tax Rates • Texas Homestead Exemption Qualifications: • Must own home Jan.1 • If over 65, exemption is immediate regardless of ownership date • Must be principal residence

  6. Tarrant County Exemption Types • Types of Exemptions • Homestead • All school districts ($15,000) • Cities can decide if they want to offer • Over 65 • All school districts ($10,000 min. & tax freeze) • Cities can decide if they want to offer (and/or freeze) • Disabled • Must provide evidence from 2 doctors • All school districts ($10,000) • Cities can decide if they want to offer

  7. Power of Escheat • Government’s right to acquire ownership of land when the landowner dies without an heir or a valid will

  8. Power of Eminent Domain • right of the government to take private property for public use upon the payment of just compensation • Use must be a valid public use. • Property owner must be compensated fairly. • 5th & 14th Amendments to U.S. Constitution

  9. Eminent Domain Issue • Broad definition of “public use” or “public best interest” • - Stadiums • - Economic Development • - Shopping Malls

  10. Eminent Domain – Philadelphia Area • 2004 • $275 million “Neighborhood Transformation Initiative” • Goal: to strengthen tax base by luring new residents with newer residential properties. • 5,500 properties to be condemned through eminent domain • Includes profitable businesses and older neighborhoods (but not slums)

  11. Eminent Domain Debate • Gives Municipalities ability to redevelop neighborhoods and replace vacant land and abandoned houses VS. • Government chooses “winners” and “losers” • Can be abused by developers who get access to cheap land/buildings • (cities often subsidize to attract development) • Can break up lower-income but very viable neighborhoods and social networks

  12. Eminent Domain Case #2 • Hurst, Texas • Late 1990s • Expansion of Northeast Mall • Remove 127 middle-class homes. • 10 homeowners sued (some owning homes for 30+ years) – lost

  13. Eminent Domain Case #3 • Toledo, Ohio • 1999 • Chrysler wanted to expand manufacturing plant (assumption of increased or retained jobs) • 83 homes bought or condemned with eminent domain • 4,900 jobs expected • Through automation only 2,100 actual jobs

  14. Eminent Domain Case #4 • Canton, Mississippi • 2000 • Construction of Nissan plant • Mississippi Major Economic Impact Authority (MMEIA) given state power of eminent domain • One family had lived in the same neighborhood for generations • Condemnation/purchase forced 15 family members to move • Nissan said they could build even if families stayed but MMEIA insisted they move anyway.

  15. Eminent Domain Case #5 • East St. Louis • 1999 • Local Racetrack wanted to expand parking • Company owning 148 adjacent acres didn’t want to sell • Racetrack went to the Southwestern Illinois Development Authority, applied, and had the Authority use eminent domain to buy the land for the racetrack.

  16. Police Power • Power to regulate use of private property to protect public health, safety, morals and general welfare • Land uses are interdependent, meaning that the way one property is used affects other nearby properties.

  17. Comprehensive Plan • Comprehensive general plan • projected economic development • transportation plan to provide for necessary circulation • public-facilities plan that identifies such needed facilities as schools, parks, civic centers, water and sewage disposal plants • land-use plan • official map

  18. Implementing Comprehensive General Plan • Zoning – division of a community’s land into districts to regulate the use of land and buildings and the intensity of various uses • Type of use – residential, commercial, industrial categories • Intensity of use - developmental density • Height and bulk limitations • Bulk regulations • Floor-area ratio • Minimum lot size and setback regulations

  19. Figure 4.1Examples of FAR

  20. Zoning Changes • Legislative relief • Administrative relief • Variances • Special use permits • Judicial relief

  21. Other Issues: • Nonconforming Uses • Building Codes • Subdivision Regulations • Subdivision Approval Process • Mandatory Dedication • Impact Fees

  22. Innovative Land-Use Control Methods • Planned unit development • Performance zoning • Incentive zoning • Transfer of development rights

  23. The Takings Issue • If government action changes value of property • Very complicated subject • Periodic court cases to refine legal definition of a “taking”

  24. End Chapter 4

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