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

Figure 4.1Examples of FAR

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”

End Chapter 4