Paul Kramer restored the Starry Nites building on University Avenue and has been promoting land-value taxation for years. PHOTO BY MATT DETURCK.
If Rochester followed the paths of cities like Harrisburg, Pennsylvania and converted to a land-value system of taxation, there could be a rush to develop city property, says Paul Kramer.
Kramer is the owner of the Starry Nitesbuilding on University Avenue. He has been advocating a change from the current property tax system to land-value taxation for years.
"The current property tax system rewards someone who takes the risk of redeveloping a building like mine by raising my taxes through the roof," he says. "The city actually penalizes you for investing here."
Kramer owns several ARTWalk properties and says that he would spend more money on development, but the current tax system results in such high taxes that it's not worthwhile.
Land-value taxation typically levies a permanent high value on land, while new construction or improvements to an existing building receive low values. The idea was developed by political economist Henry George in the late 1800's.
Rochester's current property tax system works in reverse: each major improvement made to a building can increase property taxes.
Add to that the rising costs of materials, and improving city properties becomes unprofitable, Kramer says. And as future safety, environmental, and energy-saving codes are added, the problem worsens.
Under a land-value tax, cities discourage sprawl and promote density by encouraging developers to build higher, says Joshua Vincent, director of the Henry George Foundation of America, a think tank devoted to promoting George's economic theories. As density increases, so does city revenue.
City Council members Elaine Spaull and Lovely Warren have invited Vincent to come to Rochester in April for a presentation.
Comments for "DEVELOPMENT: Rochester's new land rush?" (3)
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LVTfan said on Feb. 11, 2009 at 11:00am
Land value taxation could make a big difference for a number of upstate cities which have been suffering from the disinvestment that the conventional property tax produces.
I live in a city of 120,000 people, and for the past 35 years, there has been a 4.3 acre "hole in the ground" very close to the center of town. Even the assessor's database calls it that! Across the street on a similar-sized lot is an 18-story Marriott, which provides jobs, hotel rooms, meals, parking, meeting rooms, etc. Under our current tax structure, we penalize them for this every year via our property tax ... and we reward the sloth of the out-of-towner who owns the "hole in the ground" by taxing him less. He keeps holding out for his price, which certainly has risen over the years. He doesn't employ anyone, at least not here. He doesn't provide anything, and goodness knows our city could use some affordable housing, housing for seniors, housing for young families; a third supermarket option; etc. The property is wonderfully located ... not far from two exits of I-95, not far from the Amtrak and Metro North stations, across another street from a large shopping mall and not far from a neighborhood with a wide variety of interesting restaurants.
But the owner sits and waits. And probably never even visits. Why do we keep such perverse incentives in place?
Fortunately, there are bills pending in the Connecticut legislature which will enable cities to shift their property tax off building value and onto land value. This would reward the Marriott with lower taxes and increase the incentives for the Hole in the Ground fellow to either develop his property or reduce his asking price so that someone else can afford to do so. Either one works for me. Let's set things up so that we encourage behavior that benefits the community and discourage behavior that damages it and burdens the economy.
Doing so will also help prevent sprawl ... one downtown acre well developed can save many on the fringe from premature development. Most businesses will do better downtown than they will on the fringe, so this will also help build stability into the local economy.
Greg said on Feb. 11, 2009 at 4:23pm
What a stellar concept! Finally, a notion that will encourage investment in our city neighborhoods while at the same time improving the tax base without penalizing those of us who actually take care of our properties!
Steven Cord said on Feb. 12, 2009 at 9:40am
I have literally hundreds of EMPIRICAL studies showing that reducing the tax rate on buildings and making up the lost revenue by taxing land assessments more will surely benefit Rochester. I'll send anyone a 6-page report or a 19-page report to anyone requesting them. Rely on facts (and logic) - stevencord2000@yahoo.com
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