Chapter 4 Government Controls and Real Estate Markets
Market Failures specifically….
- Externalities
o Spillover effects of land for which initiator is not held accountable
 Traffic congestion
 Storm runoff
 Emission
- Incomplete information
o Construction quality hidden
o Buyers unable to judge natural risks
o Buyers unable to judge adequacy of structure quality
- Monopoly
o Utilities as “natural” monopolies
o “Holdouts” in land assembly efforts
3 Main Ways of Government Intervention
- Police powers
o Right to regulate land for use and set standards for safe construction
- Eminent domain
o Power to acquire private property for the benefit of the public
- Taxation
Challenges to Comprehensive Planning
- Changing notion of “best practice”
o Cul-de-sacs or grid streets
o Mixed density and mixed use of containment of nonresidential use
o How much mass transit?
- Limited actual experience to rely on
- Insufficient theory and information
- Inability to foresee the future well
Tradition vs Urban Planning
- Traditional
o Separated uses
o Automobile oriented
 Priority placed on easy ingress and egress
o Uniform density
o Cul-de-sac hierarchy in neighborhoods
- New Urban
o Mixed use
o Public transit
o Pedestrian oriented
Traditional Land Use Controls
- Building Codes
o Older than zoning
o Issues of safety
 Fire
 Sanitation
 Injury
o Continue to evolve
 Effects of Hurricane Andrew and Katrina
 New technology
 Changing perception of needs
- Zoning
o Residential, commercial, industrial
o Districts (zoning map)
o Setback requirements
o “bulk” or density limits
o Special use districts: service stations, hospitals, churches, private schools,
cemeteries
- Subdivision Regulations
o Features of subdivision regulations
 Standards for streets, sewers, and water systems
 Adequate water supply
- Planning and Zoning Administration
o Appointed by elected officials
o Advisory role
o Considers requests for zoning changes
o Requested changes must:
 Be compatible with a comprehensive plan
 Be justified if they require change in the comprehensive plan
- Board of Adjustment
o Required in zoning ordinance
o Appointed by elected officials
o Reviews petitions for variances
o Decisions are final rather than advisory to the elected officials
o Only appeal is through the court
Zoning Issues and Concepts
- Nonconforming use
o Use conflicting with zoning map, but existing prior to its enactment
 Cannot be substantially changed
 Must be continuous
- Variance
o Exception to requirements granted due to hardship
Planned Unit Development
- Very detailed development plan negotiated with authorities
- Mixed use
- Mixed density
- No standard setback requirements
- Open community spaces
- Community recreation and other facilities
Power of Eminent Domain
- Eminent Domain
o Right of government to acquire private land, without the owner’s consent, for
public use, with due process, and just compensation
- Condemnation
o Legal procedure for exercising the right of eminent domain
Property Taxes
- Primary source of local government revenue
- Reliable and countercyclical
- Many taxing authorities
o City
o County
o Schools
o Water management
o Transportation authorities
- Property exemptions from taxes
o Religious organizations
o State property
o Nonprofit organizations
o Educational institutions
o Homestead (not completely)
Issues with Property Tax
- Regressive
o May be regressive viewed alone
o Not necessarily regressive if resulting public services also are considered
- Uneven across geographic areas and property types
- Distorted by differential protection laws