Just Economics, LLC

HOW TO FUND TRANSIT (and other infrastruture)

Transit agencies, to the extent that they provide a valuable service, create billions of dollars in land value around transit stations and stops. Yet many of these agencies are critically short of funds. Why is this?

Typically, 80% to 90% of transit-created land value is given away as a windfall to nearby landowners. And, in downtowns where the majority of transit-created land value exists, these nearby landowners are among the wealthiest and most powerful landowners in a community. In other words, taxes from the general public used to create, operate and maintain transit, are enriching wealthy individuals and corporations while transit agencies are pleading poverty.

Before China assumed control of Hong Kong, Hong Kong was considered to be the motherland of capitalism. Yet, the transit agency there operated without public subsidy because the transit agency controlled the land above and around its stations. Private skyscrapers pay rent to the Hong Kong transit agency and this makes transit financially self-sufficient.

Transit agencies in the USA will not own the land above and around their stations and stops. Yet, communities can use the tax system to return publicly-created land values back to the agencies that created them. This would provide equitable and efficient funding for transit, streets, schools, and for many other public goods and services that enhance the value of nearby land.

For a discussion of "land value return" in the context of transit, see

An un-fare kind of evasion Discussions about fare evasion and free fares on public transportation miss one of the most important and justifiable sources of revenue for transit: land value return.

SINGAPORE'S PROSPERITY & ECONOMIC SUCCESS

Singapore has had a very unusual trajectory from an economic backwater in the 1950s to an economic powerhouse. There are many factors -- social, political and economic -- that came together for this to happen. The article linked below provides some insight into an often-overlooked factor that is absolutely essential to the success or failure of any society's attempt at equitable prosperity.

See

Singapore: Economic Prosperity through Innovative Land Policy A Georgist Success Story

REDUCING SPRAWL, POVERTY & INEQUALITY BY TERMINATING LAND SPECULATION

In May 2021, I gave a one-hour presentation, "Reducing Sprawl, Poverty & Inequalty by Terminating Land Speculation" for the Just Economy Conference sponsored by the National Community Reinvestment Coalition. I just discovered that my presentation is available online, so I'm sharing it with this community for those who are interested.

Reducing Sprawl, Poverty And Inequality By Terminating Real Estate Speculation » NCRC Just Economy Conference – May 12, 2021

LAND VALUE RETURN EXPLAINED

The Lincoln Institute of Land Policy just produced an info-graphic video to explain land value return and recycling. See it on YouTube at https://www.youtube.com/watch?v=r-MAnl0BPFU

UNDERSTANDING JUST ECONOMICS

LL Sontag created a podcast where she asks me about my business. In less than an hour, I provide ideas about how we can all participate in solving affordable housing, job creation and sustainable development while creating more justice and equity. Perhaps you'll get an idea about improving your community. See

Guest: Rick Rybeck, founder of Just Economics LLC Listen now (49 min) | You have nothing to lose, but your high rent!

STATE & LOCAL MATCH FOR FEDERAL INFRASTRUCTURE FUNDS

We create infrastructure to facilitate development. But if infrastructure is well-designed and executed, it inflates the price of nearby land. This drives development to cheaper, but more remote sites. Sprawl is bad for the environment. It's bad for budgets because cities must duplicate expensive infrastructure systems in these remote areas. Once they do, the cycle repeats and new development moves even farther away.

Land value return is a tool for overcoming the infrastructure conundrum. Returning publicly-created land values to the agencies that created them makes infrastructure financially self-sustaining (at least to a greater degree than under the status quo). It is equitable because taxpayers are paying in proportion to the benefits received. As a bonus, land value return encourages the development of high-value land, which tend to be infill sites near existing infrastructure amenities. Thus, adding "land value return" to your project implementation program should ensure more successful and efficient infrastructure performance and should elevate project attractiveness to federal funders.

See https://lnkd.in/dZgDCaq

Financing Infrastructure with Value Capture: The Good, The Bad & The Ugly The phrase "value capture" has been tossed around a lot lately. Here's what it does and doesn't mean.

Boosting Detroit With A Universal Tax Abatement

It's not uncommon for cities to offer tax abatements for new development. Unfortunately, this tax gimmick, typically available only to a favored few, must be subsidized by other taxpayers who are equally burdened by the tax applied to constructing, improving and maintaining buildings. And these tax abatements typically expire just when a building is old enough to require significant maintenance and/or rehabilitation -- that the increased taxes on building values will make even more costly. Thus, while these abatements might foster some short-term activity, they might doom these developments to become future slums.

In lieu of selecting a few winners at everybody else's expense, what about a universal tax abatement applied to all building owners? This is the essence of a split-rate tax approach that shifts the property tax burden off of privately-created building values and onto publicly-created land values.

New studies from the Lincoln Institute of Land Policy support this approach. See https://www.lincolninst.edu/publications/articles/2022-04-report-taxing-land-detroit-homeowners-development?fbclid=IwAR3os5oi85nhx7ZltJpo7B92mDWFf7mLGL6arqB5H4mfbSxGVeL5McTf5IA

New Report: Taxing Land More Than Buildings Would Help Detroit Homeowners and Spur Development | Lincoln Institute of Land Policy Reforming Detroit’s property tax system by taxing land at a higher rate than buildings would help to revive the local economy and reduce tax bills for nearly every homeowner, according to a new study from the nonprofit Lincoln Institute of Land Policy. With the lowest property values of any large ...

Car-Centric Developments Are Bankrupting Cities

Here's an excellent short film highlighting the excellent work of Joe Minicozzi at Urban3. Joe provides in-depth analysis about how different types of development impose costs (for public goods and services) and generate revenues (through taxes and fees).

My only complaint is that the film makes it appear that we simply have to create an "intention" for less sprawl and for more compact, mixed use development. In reality, our tax system encourages land speculation and sprawl. So good intentions will not produce meaningful results unless they are accompanied by policy changes that include tax reform.

Suburbia is Subsidized: Here's the Math [ST07] Car-depedent suburbia is subsidized by productive urban places. That's why American cities are broke. But how bad is it, and who is subsidizing who?Watch the...

Car-Centric Developments Are Bankrupting Cities

Here's an excellent short film highlighting the excellent work of Joe Minicozzi at Urban3. Joe provides in-depth analysis about how different types of development impose costs (for public goods and services) and generate revenues (through taxes and fees).

My only complaint is that the film makes it appear that we simply have to create an "intention" for less sprawl and for more compact, mixed-use development. In reality, our tax system encourages land speculation and sprawl. So good intentions will not produce meaningful results unless they are accompanied by policy changes that include tax reform.

Suburbia is Subsidized: Here's the Math [ST07] Car-depedent suburbia is subsidized by productive urban places. That's why American cities are broke. But how bad is it, and who is subsidizing who?Watch the...

ETHICAL ECONOMICS

See

"Land value return" and building a more equitable economy We create infrastructure to facilitate development. But, when infrastructure is well-designed and well-executed, it increases the price of nearby land.