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How about an “urban wealth fund”?

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Re: How about an “urban wealth fund”?

#31

Post by jnordwick »

lmm wrote: post #28

The part that's missing is that much of the market value of property in the city comes from having these public buildings in place. Libraries, hospitals, transit stations and so on could be funded entirely out of the value they add to nearby homes and business land - it's just that value can't be captured so easily, because ownership is diversified. A land/property value tax that was applied equally to public and pri…

More likely they would just reward themselves by making a hand wavy argument about how value isn't flowing to them like it should be in their idea of a rational market and increase the tax.

A land value tax would also put the onerous cost on citizens nearby and make rents and property cost even more. Then you would probably see a stream of subsides come in to support low income renters.

It seems like it is a much more intrusive government solution with a lot of downside.

Re: How about an “urban wealth fund”?

#32

Post by JumpCrisscross »

I live in New York City's Flatiron district [1], adjacent to Chelsea [2]. It's a wealthy neighbourhood with vibrant retail activity.

One day, over brunch with a friend in real estate, we did some back-of-the-envelope math on one of the neighbourhood's housing projects. If the city (or, in the case of Penn South, the coöperative) simply sold the ground floor of housing to retailers, they'd generate enough cash to build an entirely new structure somewhere uptown.

This never happens because nobody is politically incentivised to do it.

[1] https://en.m.wikipedia.org/wiki/Flatiron_District

[2] https://en.m.wikipedia.org/wiki/Chelsea,_Manhattan

Re: How about an “urban wealth fund”?

#33

Post by pm215 »

TheCoelacanth wrote: post #29
josefwasinski wrote: post #12

In London, Transport For London (TFL) is the largest land holder, and operates all public transport (trains, underground, buses, taxis) and only 23% of its funding comes from Government, the rest are from things like tickets, licenses, fees, rents etc. The government is pushing for them to become self-funded by 2018. So there is an example of how something like this could work - if you have the assets to leverage. I…

I think public transportation agencies owning land is a model that actually makes a lot of sense if you think about it. A large portion of the land's value comes from its proximity to public transportation service, so it makes sense that the public transportation service would be directly funded by collecting rent on the land value that it created.

This is somewhat similar to what the Metropolitan line did in the first third of the 20th century -- https://en.wikipedia.org/wiki/Metro-land -- though in that case I think they mostly sold off houses and building plots on the estates to gain an immediate capital return on the increased land value, rather than retaining the land and collecting rents.

Re: How about an “urban wealth fund”?

#34

Post by bilbo0s »

JumpCrisscross wrote: post #32

I live in New York City's Flatiron district [1], adjacent to Chelsea [2]. It's a wealthy neighbourhood with vibrant retail activity. One day, over brunch with a friend in real estate, we did some back-of-the-envelope math on one of the neighbourhood's housing projects. If the city (or, in the case of Penn South, the coöperative) simply sold the ground floor of housing to retailers, they'd generate enough cash to buil…

To be fair... what you described is not what's being suggested by the "Urban Wealth Fund".

What the "Urban Wealth Fund" idea would do is essentially have that property put into a pool of property with ... for instance ... the State's property. And then give out shares based on the value of the property the city put in.

I can understand why someone holding real estate would not want to do that. Especially if the city is putting in something in Flatiron... that may not be very valuable in price, but can be leased for FAR more than any of the property that the state might put in. (Even though the state's property may be more valuable in price, as some of it includes Beaux Arts buildings, but can't be leased for as much.)

It's far smarter for the city to just go it alone in that instance. (Well, I guess "smarter" is too loaded of a word, so maybe I should just say that the city would derive far more profit from just leasing the space on its own.)

And that's just the single instance you mention. It gets even more complex when you talk about the city kicking in an asset like... say ... Central Park.

Re: How about an “urban wealth fund”?

#35

Post by lmm »

jnordwick wrote: post #31
lmm wrote: post #28

The part that's missing is that much of the market value of property in the city comes from having these public buildings in place. Libraries, hospitals, transit stations and so on could be funded entirely out of the value they add to nearby homes and business land - it's just that value can't be captured so easily, because ownership is diversified. A land/property value tax that was applied equally to public and pri…

More likely they would just reward themselves by making a hand wavy argument about how value isn't flowing to them like it should be in their idea of a rational market and increase the tax. A land value tax would also put the onerous cost on citizens nearby and make rents and property cost even more. Then you would probably see a stream of subsides come in to support low income renters. It seems like it is a much mor…

> More likely they would just reward themselves by making a hand wavy argument about how value isn't flowing to them like it should be in their idea of a rational market and increase the tax.

Well, no tax system is immune to people arbitrarily raising the tax rate.

> A land value tax would also put the onerous cost on citizens nearby

It means the costs are shared in proportion to the benefits rather than everyone in the city paying for improvements that only benefit one area. (And if the city builds a prison or incinerator in your backyard that harms your property value, then at least it lowers your taxes).

> make rents and property cost even more

It should lower the cost of property (since property now comes with a tax liability) and encourage putting land to productive use (i.e. building houses rather than "land-banking") or selling it to people who can use it, which would lower rents. What it penalizes is using property as an investment.

(Land value tax is not just some random idea I came up with; it was advocated by Adam Smith, Ricardo and others. Look at the writings of Henry George, and look at SF property prices today and tell me he was wrong: gains in economic productivity are captured by the rentiers who own land rather than going to those who produced them).

Re: How about an “urban wealth fund”?

#36

Post by tl2747 »

khuey wrote: post #23
ebiester wrote: post #20

Earlier quoted context omitted.

NYC has them. They're in some stations in Boston, but many just don't have the space for it. IIRC, they're non-existant in the Bay Area.

There are a couple shops on the mezzanine levels of the BART stations on Market Street.

Civic center station has an open air drug market, but I'm not sure the city is getting much in the way of revenue from that.

Re: How about an “urban wealth fund”?

#37

Post by mathattack »

ThrustVectoring wrote: post #10
mathattack wrote: post #9

Could this be used to fund Universal Basic Income? A starter is looking at the wealth fund in Norway or citizen dividends in Alaska.

Not really. Unless you get efficiency gains, all the income from the government charging itself rent gets eaten up as expenses for paying itself rent. Basically what it's doing is making imputed rent an explicit budget item, and then allowing financial ~stuff~ to be done with those budget items explicitly (say, letting a department save money by using real estate more efficiently).

My interpretation was they charge other people rent for the services, no?

Re: How about an “urban wealth fund”?

#38

Post by huac »

tl2747 wrote: post #36
khuey wrote: post #23

Earlier quoted context omitted.

There are a couple shops on the mezzanine levels of the BART stations on Market Street.

Civic center station has an open air drug market, but I'm not sure the city is getting much in the way of revenue from that.

Funnily enough, a bunch of the stations I saw in Korea and Japan had 'public market' areas, where they rent out stalls to local/smaller merchants.

Re: How about an “urban wealth fund”?

#39

Post by crdoconnor »

jnordwick wrote: post #31
lmm wrote: post #28

The part that's missing is that much of the market value of property in the city comes from having these public buildings in place. Libraries, hospitals, transit stations and so on could be funded entirely out of the value they add to nearby homes and business land - it's just that value can't be captured so easily, because ownership is diversified. A land/property value tax that was applied equally to public and pri…

More likely they would just reward themselves by making a hand wavy argument about how value isn't flowing to them like it should be in their idea of a rational market and increase the tax. A land value tax would also put the onerous cost on citizens nearby and make rents and property cost even more. Then you would probably see a stream of subsides come in to support low income renters. It seems like it is a much mor…

>A land value tax would also put the onerous cost on citizens nearby and make rents and property cost even more.

It would drag down property values because making owning something a liability strangely enough makes people want to own it less.

Rents would probably go down as land that was previously hoarded unproductively would hit the market.

Added to which city budgets would start overflowing with money which could be used to build additional housing for low income renters on land that has been yielded by hoarders.

Land owners - especially people with generations of wealth - would go nuts, since their license to tax people for using their land will have been revoked.

Re: How about an “urban wealth fund”?

#40

Post by crdoconnor »

TheCoelacanth wrote: post #29
josefwasinski wrote: post #12

In London, Transport For London (TFL) is the largest land holder, and operates all public transport (trains, underground, buses, taxis) and only 23% of its funding comes from Government, the rest are from things like tickets, licenses, fees, rents etc. The government is pushing for them to become self-funded by 2018. So there is an example of how something like this could work - if you have the assets to leverage. I…

I think public transportation agencies owning land is a model that actually makes a lot of sense if you think about it. A large portion of the land's value comes from its proximity to public transportation service, so it makes sense that the public transportation service would be directly funded by collecting rent on the land value that it created.

That's what the train companies do in Japan. They sell tickets virtually at cost and make their profits by building malls and shops next door to their stations and leasing the space out.

In the UK surplus value from land next to public transport is usually captured by private landlords while train tickets have gone up and up and up.

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