How zoning and taxation keep fallen properties from getting up

By Tim Tielman

Leave it to former Buffalo Mayor Jimmy Griffin, in the manner of a comet with an eccentric orbit, to shed light on the forces which shape the nature of the urban universe. Tugged by the black holes of zoning and taxation, manifested in the much-hated Garbage Fee, Comet Griffin crashed into current Mayor Tony Masiello’s neighborhood summit in South Buffalo last November.

His Ex-ness wishes to pin the blame for the fee on the current mayor. The argument, as reported in the Buffalo News, is that Citizen Griffin owns a vacant lot at 602 South Park Avenue (the ancestral home?) for which he is taxed only $49 dollars per year (based on an assessment of $2,400). His annual garbage user fee is over $141—more than his property taxes!

Absurd? Yes. Either Griffin should be assessed, oh 10 times more, or he should be assessed nothing, pay no taxes, and pay no garbage fee. It is more the current zoning and taxation systems, rather than Mr. Masiello, that are responsible for new fees.

When a house is demolished on a 25' lot, current zoning renders it forever irreplaceable. We continue to clutch that zoning code in a death grip like a cancer victim on a cigarette. In the meantime, the lot owner, scallywag or solid citizen, is taxed for a non-performing asset.

Since Jimmy Griffin can’t build on that lot even if he wanted to, the zoning forces assessors to devalue the property and reduce taxes.

This is particularly galling in higher value neighborhoods or historic districts, where vacant lots are a drag on property values, lend a gap-toothed look to the streetscape, and infill development is most likely.

Changing the zoning could in and of itself increase assessments by tens of millions of dollars (the city has over 9,000 vacant lots).

A fairer zoning system could lead to a fairer and more efficient tax system. In a chapter on property taxation in his Home from Nowhere, James Howard Kunstler finds, “Our system of property taxes … favors speculators who sit on vacant or underutilized land…It is one of the biggest impediments to the free market creation of affordable housing.”

An alternative is site-value taxation, to tax land itself, not improvements on it, an idea first propounded by Henry George (1839-1897). The theory is that land gets its value from the public investment and private activity around it –“socially created value“— and should be taxed according to that.

Many Pennsylvania cities have adopted this Georgist code, including Pittsburgh and Harrisburg, where the city started shifting to site-valuation in 1977. Between 1981 and 1994, the number of businesses in Harrisburg rose from 1,908 to 4,541, and in 1994 the city issued the most building permits in its history.