Land value capture

[rbt]

Why do we need new taxes to "identify an actual rise in value"? Won't current tax system do that? The value of their properties increase, they pay more on the increased assessment base. The City gets more tax dollars.

This does not happen. If real-estate values across the city go up 10% it contributes 0% to Toronto's revenue.

The only time Toronto gets additional tax revenue is if it a) raises the tax rate, which we do annually at roughly the inflation rate; or b) a new development is built and registered.

Property value changes impact the percentage of the total you pay versus your neighbour, but the process is revenue neutral from the perspective of the city (you pay $50 more for your house price increase and the guy on the other end of town pays $50 less because his stayed the same or decreased in value).

 

[rbt]

1, excess land surrounding the new line is expropriated before construction
2, once construction is complete, the newly valuable land is sold to the highest bidder

Quite probably illegal to expropriate a wide swath of land for this purpose; and even if not it would be a long and drawn out battle between developers (currently speculating) and the city in the court system.

It would almost certainly result in the elected officials pushing the idea to be kickd out of office in very short order.

Paying market rates without the use of expropriation, just like any other land consolidator, would probably be fine but wouldn't accomplish very much other than to add to the debt load.

 

[Glen]

This is true from the property owners perspective but it is not from the cities perspective as property assessments do not change the total revenue to the city. Assessments change the balance of what is paid between you, your neighbour, and the guy on the other side of town. By having a special piece of taxation above normal the city will gain additional revenue which may be used to pay off loans for the infrastructure.

You actually argued in favour of it by saying the property owner would see the same total payment.

That is not what I said. Even with increased assessments and a corresponding reduction in the mill rate, the properties effected would receive a higher tax bill*. The incidence of higher land values would fall on them. I agree that from the city's perspective it would be revenue neutral. On the other hand they could adjust the mill rate so that those properties not affected be the increase in value would have a revenue neutral tax mill rate adjustment, therefore the full increase would be captured on the properties that had the increase in values via transit expansion.

* see previous about capitalization of taxes and revenue maximums

 

[gweed123]

How about this:

1, excess land surrounding the new line is expropriated before construction
2, once construction is complete, the newly valuable land is sold to the highest bidder

Or you could expropriate properties to do cut and cover construction, and then sell the land back to developers afterwards, with a premium placed on it as a result of the subway. That would be the same thing as taxing, because the property would be bought at market value for $X, and then sold afterwards for $X + 10% or so.

EDIT: And even the lands that you didn't buy up, the city would get money from them because of the land transfer tax. Having the city own the land just determines what that $X + Y% is.

 

[Mapleson]

This isn't about revenue, but about Cost-Benefit Analysis where rising property values is a benefit that can be attributed against the cost. This social value is imaginary just like the environmental value from 'taking 1000 cars off the road'. Any transit deticated money will either have to come out of existing taxes and municipalities trim other budgets or levy new taxes.

GO is very proud that they have never use their expropriation powers. I don't see them started to for a complex scheme to make huge amounts of money by defrauding home owners. If not, why didn't they do this on the Weston corridor and shut them all up about the noise.

The Metrolinx task force on land value enhancement was supposed to be formed by the end of 2009. Has anyone heard anything more about it? Value Capture counteract the political adjenda of intensification around transit. When the task force gets around to having some findings, a Transit and Transportation Investment Fund will be their core tenet.