Wealth and Want
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Urban Planning

Can the private sector do it — well — by itself? Yes, potentially, if the incenitves are logical and aligned with what we'd like to have. Otherwise, we're just serving the entrenched interests.

Jeff Smith: Planning by Markets

Planners have a litany of great ideas for rebuilding cities(4) -- set-backs, landscaping, pedestrian bridges, bridges, etc -- but have no idea of how to pay for them. One way is to let them pay for themselves. Improving a city raises its land's value. A tax or fee can collect this ground rent that can then be used to pay off the earlier investment in ecologizing the city(5). Indeed, the expected change in land value can be a perfect measure of some proposed improvement's worthiness. If it can pay its way, throw it up. If it can't, then back to the drawing board.

No longer inhibited by the property tax yet spurred by annual land dues (tax or fee), owners and developers get busy. Some Australian towns that tax land alone average 50 percent more built value per acre than those that don't. Since a mix of apartments, stores, offices, schools, theaters, etc. maximizes site value and the return to builders, they could find themselves pulling on the same end of the rope with planners.

Where planners, armed with the sternest growth control measures, have failed, geonomics can succeed. By making speculation too expensive, it unplugs the "metro tub," letting the flow of development return to its natural course, filling in the vacant lots and abandoned buildings. Clever local governments, no longer able to tax willy-nilly and thus more dependent upon site rent, would squeeze streets, now overly wide for traffic, replacing parking lanes with space for sidewalk cafes beneath rows of shady trees, alongside lanes for bikes, and thereby drive up site values.

... How long would it take to ecologize cities after shifting its property tax? While Johannesburg (South African) levied a rate of only 3 percent on site value, it enjoyed the fastest site-recycling rate in the world, a little over 20 years. Within a couple decades, we could have those cities we'd love.

As cities grow more livable and lovable, their site values rise. The resultant increase in land dues would push owners to continually convert to highest and best use automatically. In this positive feedback loop, cities would constantly renew.

While generals and anarchists might not easily find common cause, planners and markets can, when planners paddle with, not against, the mighty current of rent. Correcting the market, so that taxes and rents no longer interfere with the choices of owners and developers, would attain highest and best use of sites automatically.  Read the whole article

Herbert J. G. Bab:  Property Tax -- Cause of Unemployment -- circa 1964

Property taxes shape the pattern of our cities.

  • If taxes on improvements are low or non-existing and taxes on land are high, the cities are bound to grow vertically and at a fast rate.
  • If taxes on improvements are high and taxes on land are low, our cities will spread over larger and larger areas. They will become metropolitan areas and they will grow at a much slower rate.
Relatively low taxes on land and high taxes on improvements will discourage the owners of vacant lots or underdeveloped land, such as that used for parking lots, gas stations, hamburger stands, etc., from improving their land. It will encourage them to keep the land out of use and to sell later at a profit. This will create an artificial shortage of land, which in turn will lead to urban blight and irregular, leapfrog city growth.

This urban sprawl makes our cities look ugly, but it has many disadvantages besides:
  • It gobbles up a tremendous amount of farm land;
  • the farmers have to give up their land before it is really needed;
  • the building developer has to go far out to find available land;
  • the prospective home-owner has to travel farther;
  • traffic on congested roads will increase and
  • new roads and schools will have to be built.
It is generally believed that zoning laws are a very effective tool to control the growth of our cities. Zoning laws determine the best possible use of urban land. Yet nobody can be forced to improve his land and to build unless there is an incentive. This can be achieved by taxing land at a rate that will make it unprofitable to hold it without improving it.

The city planner needs land taxation just as he needs zoning laws. With both these tools the orderly growth of our cities will be assured, but -- as experience has shown -- without land taxation rational and efficient land usage becomes impossible. Read the whole article

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper