I live in a small city within easy commuting distance of New York City. It includes some lovely waterfront communities (with property values to match), a downtown with many corporations, a 1- and 2-acre zone, neighborhoods that include children who collectively speak 30 or more different languages and many whose families live below the "self-sufficiency level", multiple high schools, a few magnet schools.
There are a number of subdivisions which have some common property, and it turns out that the local assessor has been very generous with them. Is this legitimate, or is it a privilege (private law, for the benefit of a few at the expense of the rest of the community)? I can't see how it is anything but a privilege, a free lunch for special people. (To which I say, eschew privilege!!)
I'll start with the waterfront communities. There are several of them. Within one, there are are several private associations. No gates, no signs, except the "no trespassing" signs on their private beaches; other than the beach signs and the real estate ads, which invariably mention "deeded beach rights," they don't seem any different from other streets on their peninsula. But each of the three sub-neighborhoods has some private property on the waterfront.
The first such neighborhood is a series of 3 parallel streets, perpendicular to the beach, plus a fourth street that parallels the shore and at least one property on the main street. On the water side, the 0.3 to 0.4 acre lots on which there are homes are assessed at $1.1 to $1.3 million (all values are the 70% figure, not the 100%). Across the street, the lots (0.14 acres) are valued at $410,000 and the 0.28 acre lot at $475,000. On the 3 side streets, the small lots are valued at ~$410,000, the larger ones at ~$477,000. It turns out that the homes on one side of 1 of the 5 streets which were built after 1970 are not part of the homeowners' association and the beach; a recent article in the local paper notes that owners are protesting their assessments being similar to their neighbors who are owners of the deeded beach. But the interesting assessment is for the deeded beach itself: the (individually owned) lots on the waterfront, with sizes between 0.18 and 0.40 acres, are valued between $1.1 million and $1.25 million. But the shared beach, off limits to all but the 60 or 70 homeowners with DBR, is valued at $159,000 for its 0.54 acre property. The 2008 property tax on that amazing lot -- fully large enough for a house -- is $1,130 or about $16 per year per house with deeded beach rights. One of the co-owners is an inn, far from the water, which advertises its "private beach" and is on the market for over $3.5 million. (Its 0.85 acre land assessment actually exceeds the waterfront properties, at 1,456,000, for reasons that are not obvious.)
A bit further down the waterfront is another homeowners' association which has two beachfront properties. Waterfront lots, ranging in size from 0.53 to .89 acres, are valued at 1,771,000 to $1,847,000; the two association beaches, of 0.46 and 0.62 acres, are assessed at $58,000 and $53,000 respectively.
And the next homeowners' association, this one formed more recently, with both beach and tennis court on 0.70 acre, is valued at $54,220, while neighboring waterfront land (0.27 and 0.35 acre) are assessed at $1,627,000 and $1,665,000; the inland member lots, with excellent water views, roughly 0.25 acres, are valued at ~$825,000.
In another waterfront area -- a different peninsula, a mid-70s
subdivision where teardowns have begun to occur, a 4.5 acre lot owned
by a neighborhood club is valued at $4.046 million. (Yet less than
half a mile away, there is a golf course valued at a mere $140,000 per
acre.) Neither is accessible to the general public.
In the northern part of town, in the 1-acre zoning area, there is a 1950s subdivision with a 1-acre lake beach lot, held by the homeowners for their exclusive use; it is valued at $58,000, compared with ~$325,000 for a neighboring lot of similar size.
It doesn't make sense to me that those who own these properties shouldn't be fully assessed on them. The working class people who own much more modest lots, and aren't welcome on these private beaches, are forced to subsidize them.
And then, because we don't want the working class folks to have too high a tax increase, the town has been "phasing in" the previous (2006) revaluation, which means that for 2008's taxes, the valuations are based 80% on 1999 and 20% on 2006's valuation.
Good valuations, which value the land first, and treat the existing buildings as the residual between total property value and land value -- that is, as the depreciating asset that they are -- are an important part of both economic justice and wise incentives. When land gets undervalued, and buildings overvalued, we send the wrong signals, and encourage behavior on the part of landholders that is bad for the community. Land value is created by the community, and more of it should be collected back for the benefit of the community, while leaving in the hands of private owners the full value of their buildings.
Privilege creates free lunches for some, paid for by others. And generally, those free lunches tend to be for the most valuable neighborhoods, and the bill is paid by those who live in more modest areas. (See also the forthcoming piece on Ricardo, and the YouTube video!)
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