It isn't just urban land that is the subject of speculation. Rural farmland can also be speculated upon, to the private benefit of individuals, and the loss of ... the rest of us, the community!
StarWatch investigation: State paid twice what some I-69 land was worth
To secure path for I-69, INDOT offered $7M for property appraised at $3.34M
Written by Ryan Sabalow and Tim Evans | 7:47 PM, Nov 10, 2012
BLOOMINGTON, Ind. -- In 2006, Barry Elkins paid $850,000 for about 200 acres in Monroe County owned by former Indiana University basketball coach Bob Knight.
|$4,250 per acre
Elkins told a local newspaper he had no plans to develop the land. He said he also was quite aware state officials planned to acquire at least some of the property for the new I-69 freeway project.
Nonetheless, Elkins told a reporter: "It's a heck of a piece of ground."
Turns out, it produced a heck of a profit, too.
In July, state highway officials paid Elkins $2.41 million for an easement covering 140 of the 200 acres. That's almost four times the $658,800 that state appraisers said the easement was worth.
|$17,214 per acre for the 140 acres.
$658,800 is $4,705 per acre.
The $2.41 million represents a profit of $1.56 million since 2006, still leaves the owner with 60 acres with no easement and 140 acres with an easement. The $1.56 million profit in 6 years on an $850,000 investment is 84%! Quite a return! For what effort?
What did society get in return?
According to I-69 cost estimates INDOT provided this summer, $162.6 million in state and federal funds were spent on right-of-way purchases along the new stretch of freeway.
He said the property payments also haven't caused the project to go over budget. He said the I-69 project is 25 percent under budget estimates. Officials this summer pegged the cost of the Evansville-to-Bloomington project at $1.5 billion.
The land Elkins bought from Knight wasn't the only Monroe County
property along I-69's path that he sold to the state for far more than
its fair market value. He and two co-owners also got $348,600 for a
27-acre property appraised at $194,625; and $795,956 for 58 acres
appraised at $278,295.
As for the former Knight property, the state purchased the easement to create an "environmental mitigation site" to make up for damage to forests, wetlands, wildlife habitat and other natural resources caused by the new freeway.
After the $2.41 million payday -- which was nearly three times the amount Elkins paid Knight for the entire 200 acres -- Elkins still owns the picturesque expanse of undeveloped pasture and woods about eight miles southwest of Bloomington.
The easement forbids any development on 140 acres of the land but allows Elkins to use it for "low-impact" recreational activities such as hiking, photography and hunting.
And he doesn't have to pay property taxes.
One might reasonably ask what valuation Elkins was paying property taxes on before the transactions.
One might reasonably ask how much the labor costs on this project were -- what men and women got paid for their hours of labor put into building the highway, and then compare that to Mr. Elkins' and others' receipts as passive landholders!! Quite amazing that we treat the "rights" of landholders as more sacred than we make the rights of the community or of those who work.
One might reasonably wonder how soon the communities along the route of this new highway will revalue their land, and whether the communities will collect more from those whose land benefited from the presence of this highway (and less from those whose properties were in reality negatively impacted, should that be the case). In general, the aggregate benefits will far exceed the aggregate negative impacts, and would likely be enough to pay all the costs of the construction.
Mr. Elkins' free lunch did not come out of thin air. And likely, his heirs will continue to enjoy the benefit of it.
THIS is how wealth concentrates. This is why we are forced into taxing wages, and sales, and other things we have no business taxing!