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 • 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
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.
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
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
Power of Escheat • Government’s right to acquire ownership of land when the landowner dies without an heir or a valid will
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
Eminent Domain Issue • Broad definition of “public use” or “public best interest” • - Stadiums • - Economic Development • - Shopping Malls
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)
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
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
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
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.
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.
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.
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
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
Zoning Changes • Legislative relief • Administrative relief • Variances • Special use permits • Judicial relief
Other Issues: • Nonconforming Uses • Building Codes • Subdivision Regulations • Subdivision Approval Process • Mandatory Dedication • Impact Fees
Innovative Land-Use Control Methods • Planned unit development • Performance zoning • Incentive zoning • Transfer of development rights
The Takings Issue • If government action changes value of property • Very complicated subject • Periodic court cases to refine legal definition of a “taking”