Sometimes, I wish we could just flush them all and start over!
Posted on 11/01/2003 7:39:47 AM PST by SheLion
SAN FRANCISCO (CBS.MW) -- Budget crunches at all levels of government are likely to come home to
roost on real estate owners and homebuyers as municipalities are forced to raise property taxes and
boost fees on home construction, experts argue.
"We are so pressed at state and local levels for money ... that it is going to
be tougher for cities and counties and other local units of government to meet budgets," said Maureen McAvey, a
senior resident fellow at the Urban Land Institute, a Washington land-use education and research organization.
In high-growth areas, the squeeze will not be as pronounced, McAvey said, because new development will
naturally raise the tax base. But in most areas, harder and more potentially divisive decisions will have to be
made, she said.
"Sales taxes and sin taxes have really raised a lot of revenue and helped hold off on increases elsewhere. But in
most place those taxed have reached their upper limit," said Ellen Marshall, a vice president at Patuxent
Consulting Group in Washington.
"That's going to put pressure on property taxes in the next few years," Marshall told a session of the Urban Land
Institute here this week.
In their search for money to replace federal and state cutbacks, local governments may also turn increasingly to
higher impact fees -- charges levied on developers and homebuilders -- and to additional taxes on services like
real estate and mortgage brokerage.
Those two moves could add the cost of buying or selling a home, and would likely drive up the cost of new
housing, a panel of realty experts agreed.
"If these budget deficits continue, I see more and more impact fees coming," said J. Ronald Terwilliger, national
managing partner in Atlanta for development firm Trammel Crow.
Fees expand -- and explode
Already in states like California, fees run as high as $30,000 per developed unit, Terwilliger said, on top of land
costs of about the same amount. "It makes it pretty hard to develop any affordable multifamily housing starting
from that base," he said.
Terwilliger pointed to other places where real estate has been targeted to produce more revenue: New Jersey has
boosted its realty transfer tax, paid when a house changes hands, by 50 percent; property assessments in
Virginia have risen double digits for the last several years, boosting taxes; Raleigh, N.C., has added a $1,000 per
unit school fee; and in southern Florida builders must now pay a "concurrency" fee of $10,000 per multifamily
unit, along with a $16,000 water and sewer fee.
"We're seeing a lot of different, creative uses of these fees. And we're just at the beginning," he said. "Those fees
either increase the cost of what you build or detract from the income you can earn."
Nicholas Pappas, president of homebuilder K. Hovnanian Companies of California, (HOV: news, chart, profile)
said impact fees in his state have tripled in the last decade, from about $10,000 per home to $30,000 or more.
"These are not seen as a tax, so they don't hit the radar screen of tax increases. They are buried in the one-time
cost of housing or the square footage rent of a commercial property, but they are not a matter that become a
political hot button at all," Pappas said.
"The problem is that once they are established, they never seem to go away, even if the impact [they were
designed for] changes."
Real estate bears the brunt
The reliance on real estate to fund local government is nothing new; already, 70 cents of every dollar of local tax
revenue is derived from real estate, said Jeffrey DeBoer, president of The Real Estate Roundtable, a Washington
lobbying group.
But that dependence can have unintended consequences, McAvey pointed out. Because sales taxes have
become so coveted, "every little municipality pushes for its own strip malls and mini-centers to get whatever sales
tax they can," she said.
"You go out and look and all these centers are just two-thirds full two years after they were built because there's
so much retail out there."
Unlike the federal government, states and local authorities generally must present balanced budgets ever year,
returning money in the surplus times but forced to make cuts when times are tough.
For many, property taxes have been the savior in the downturn of the last three years because housing has been
the one area of the economy that has percolated, sending home prices -- and thus property-tax revenues --
higher.
Those in real estate say only overall economic growth that includes new corporate hiring can lessen the
dependence on property fees.
"Hopefully the good news on the gross domestic product, and then on jobs, will help," Terwilliger said.
Steve Kerch is the real estate editor of CBS.MarketWatch.com in Chicago.
I am aware this process started when LAUSD cried for a bigger share of state wide property taxes to run their pathethic public education system and got the California Supreme Court to go along with their scheme but I don't remember how Pete Wilson got the rest of the money. The electorate was asleep at the wheel.
While it was easy for large cities/counties, with large electorates to rip off smaller, wealthier cities/counties I'm betting today they wished they hadn't. I'll bet today LA wishes they hadn't reliquised their taxing authority to the state to get a few more education dollars.
High property taxes will drive most blacks out of urban areas. Then we will have to entice them back with "diversity" tax rates, taxes they can afford. It will be like affirmative action in admissions.
Yep, whitey is going to have to pick up the slack here. We'll raise urban property taxes so we can redistribute that wealth to those who really need it and deserve it.
Sometimes, I wish we could just flush them all and start over!
Much to yours and other California(n) haters dismay, in California they can impose all the one time fee's they can get away with but they CANNOT raise property taxes to more than 1% of the appraised value....
Here's something else that may grate at your philosophy in more ways than one: Record Liquor License Applications in California
That is too sickening.
You know, when people run for office, they promise us the moon to get our vote. Once they are in their seat, they stick it to us every chance they get. I'm tired of it. It's hard to trust any of them anymore.
How could any of us in California forget? (A rhetorical question, I assure you.)
It's also going to be hard for rental owners whose property is subject to rent control. The costs go up higher than they can raise the rent.
An herein lies the savior of the counties ...appraised value.
While the counties are forced to hand over their property tax receipts to the state the counties are still soley empowered to appraise property values.
How long will it take before the counties figure out it is their best interest to slowly devalue property and shift to use taxes and fees as a way to keep more tax money under local control.
The assessed value of my home went up 2.157%. The state's portion of the property tax was 1% of the assessed value, but after adding in the city and county's portion, the total tax was 1.41608% of the assessed value.
I have NO idea. Anyone else???
I know "I'm" tired of having their hands in my pockets, while they live the good life!
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