Estimating Land Values
Ted Gwartney, MAI
Assessor, Greenwich, Connecticut
[1999]
CONTENTS
The Nature of Land and Natural Resources
- Characteristics of Land
- Land Rent Compared with Market Value
Principles of Land Assessment
- Utility, Scarcity and Desirability
- Limitations on Land Ownership and Use
- Factors that Contribute to Land Value
- Highest and Best Use of Land
- Procedures for Land Assessment
- Defining the Assignment
- Determining the Data Required and Its Source
- Collecting and Recording the Data
- Verifying the Data
- Analyzing and Interpreting the Data
- Estimating the Market Values
- Public Examination and Analysis of the Land Market Values
- Periodic Updating of Assessments
Methods Used to Assess Land Value
- Three Approaches to Valuing Real Estate
- Specific Methods Used in Appraising Land Value
- Sales Comparison
- Per Dwelling Unit Site
- Per Square-Foot
- Per Acre
- Per Front-Foot
- Proportional Relationship
- Developmental Analysis
- Allocation
- Extraction
- Ground Rent Capitalization
- Subdivision Development
- Land Value Maps
- Computer Estimated Land Values
The Source of Public Revenue
- Environmental Preservation
- Efficiency of Public Revenue
- How Much Land Rent Should the Community Collect?
THE NATURE OF LAND AND NATURAL RESOURCES
Characteristics of Land
Land, in an economic sense, is defined as the entire material
universe outside of people themselves and the products of people. It
includes all natural resources, materials, airwaves, as well as the
ground. All air, soil, minerals and water is included in the
definition of land. Everything that is freely supplied by nature,
and not made by man, is categorized as land.
Land holds a unique and pivotal position in social, political,
environmental and economic theory. Land supports all life and stands
at the center of human culture and institutions. All people, at all
times, must make use of land. Land has no cost of production. It is
nature's gift to mankind, which enables life to continue and
prosper.
Land's uniqueness stems from its fixed supply and immobility. Land
cannot be manufactured or reproduced. Land is required directly or
indirectly in the production of all goods and services. Land is our
most basic resource and the source of all wealth.
Land rent is the price paid annually for the exclusive right (a
monopoly) to use a certain location, piece of land or other natural
resource. People receive wages for work, capital receives interest
for investment, and land receives rent for the exclusive use of a
location. Equity and efficiency require that the local general
public, who created land value, should be paid for the exclusive use
of a land site. That Payment is in the form of a land tax.
When considering world-wide economics, most people think that land
rent contributes only a small insignificant portion of value. But as
societies progress, land has become the predominant force in
determining the progress or poverty of all people within a
community. Land in major or cities is so costly that people are
forced to move further away and travel great distances in order to
get to work and social attractions. In the more developed countries
of the world, land rent represents more than 40% of gross annual
production.
Since land is fixed in supply, as more land is demanded by people
the rent will increase proportionally. Demand is the sole
determinant of land rent. Changes in land rent and land taxes have
no impact on the supply of land, because the land supply is fixed
and cannot be significantly expanded. Labor and capital are variable
in supply. A higher price for commodities causes more labor and
capital to make itself available. Labor and capital are rewarded for
their work. A high price is an incentive to work harder and longer,
while a low price is not an incentive to work harder and longer.
The rent of land, however, serves no such incentive function,
because the supply of land is fixed. The same amount is available no
matter how high or low the price. Buildings are not a part of land
rent. Land rent results from the desire made by everyone who lives
within a community to use land. Economic rent is the only source of
revenue that could be taken for community purposes without having
any negative effect on the productive potential of the economy.
Economists consider rent to be a surplus payment which is
unnecessary to ensure that land is available. When a community
captures land rent for public purposes, both efficiency and equity
are realized.
The economic market rental value of land should be sufficient to
finance public services and to obviate the need for raising revenue
from taxes, such as income or wage taxes; sales, commodity or
value-added taxes; and taxes on buildings, machinery and industry.
Public revenue should not be supplied by taxes on people and
enterprise until after all of the available revenue has been first
collected from the natural and community created value of land. Only
if land rent were insufficient would it be necessary to collect any
taxes.
The collection of land rent, by the public for supplying public
needs, returns the advantage an individual receives from the
exclusive use of a land site to the balance of the community, who
along with nature, contributed to its value and allow its exclusive
use.
LAND RENT COMPARED WITH MARKET VALUE
Land Market Value is the land rental value, minus land
taxes, divided by a capitalization rate. (1)
Each of these terms is defined as follows:
- Land Rental Value is the annual fee individuals are willing to
pay for the exclusive right to use a land site for a period of
time. This may include a speculative opportunity cost.
- Land Taxes is the portion of the land rental value that is
claimed for the community.
- Capitalization Rate is a market determined rate of return that
would attract individuals to invest in the use of land,
considering all of the risks and benefits which could be realized.
- Land Market Value is the land rental value, minus land taxes,
divided by a capitalization rate.
The mathematical relationship is then:
| Land
Market Value |
= |
Land
Rental Value - Land Taxes
Capitalization Rate |
Land Rental Value = Market Value x Capitalization
Rate + Land Taxes
For example, assume that the land rent for a site is $1,800, the
land taxes are $300 and the capitalization rate is 6%, what would
the land market value be?
| Land
Market Value |
= |
Land
Rental Value - Land Taxes
Capitalization Rate |
| Land
Market Value |
= |
$1,800 -
$300
6% |
= |
$1,500
6% |
= |
$25,000 |
What would result if a larger portion of the land rent were
collected? Let's consider $1,650 rather than $300.
| Land
Market Value |
= |
$1,800 -
$1,650
6% |
= |
$150
6% |
= |
$2500 |
If any three factors are known, the fourth can be calculated. The
term land rental value can be used instead of market value, or vice
versa, in the discussion of land assessment systems.
If only a small amount of land rent remained to be capitalized
after land taxes were collected, land could have a lower market
value. It would, however, continue to have the same rental or
productive value to the community
Not only is land rent a potentially important source of public
revenue, the tax on land is a means of limiting excessive
speculation in land prices. This would ensure that the equal
opportunity to be productive would be available to all citizens.
With limited money to invest, people could invest in productive
equipment and wages, rather than in high land prices which produce
no additional tangible wealth.
The formula indicates how simple it would be to translate market
value to rental value or vice versa, depending upon the policy of
any nation. In the United States and most other countries, land
values are estimated and assessed. Land taxes, however, are a
portion of land rent. The balance of this paper will explain how
land values are estimated.
PRINCIPLES OF LAND ASSESSMENT
An appraisal is essentially an expert opinion of the market value
of a site; the assessor must present one that is supportable and
comprehensible. The assessor must develop and use specific
terminology suitable and pertinent to land appraisal.
Land is the entire non-reproducible, physical universe,
including all natural resources. A land site includes everything
within the earth, under its boundaries and over it, extending
infinitely into space. In addition to a location for a house or
building, a land site would include the minerals, water, trees,
view, sunshine and air space. The shape of the site can be described
as an inverted cone with its apex at the center of the earth and
extending upward through the surface into space.
In appraisal, a land site is a parcel of land that is
finished and ready for use under the standards prevailing in its
area. It might have the necessary public utilities in place, like
gas, electricity, water, telephone and sewer, with streets,
sidewalks drainage and grading completed.
The assessment process is essentially the valuation of
rights to use or possess land sites. Other kinds of rights include
subsurface mineral rights, riparian (water) rights, grazing rights,
timber rights, fishing rights, hunting rights, access rights and air
rights.
The assessor bases his estimate of land market value upon basic
economic principles which serve as the foundation of the valuation
process. There are many economic principles which people and
assessors must understand and use when implementing judgment to
estimate land market values. It is necessary to discuss a few of the
more important principles.
The principle of substitution maintains that the value of
a property tends to be set by the price that a person would have to
pay to acquire an equally desirable substitute property, assuming
that no expensive delay is encountered in making the substitution. A
person would pay no more for a site than would have to be paid for
an equally desirable site.
The principle of supply and demand holds that the value of
a site will increase if the demand increases and the supply remains
the same. The value of the site would decrease if the demand
decreased. Land is unique, since the supply is fixed; its value
varies directly with demand.
The principle of anticipation contends that land value can
go up or down in anticipation of a future event occurring, or a
future benefit or detriment.
The principle of conformity contends that land will
achieve its maximum value when it is used in a way that conforms to
the existing economic and social standards within a neighborhood.
UTILITY, SCARCITY AND DESIRABILITY
Land value can be thought of as the relationship between a desired
location and a potential user. The ingredients that constitute land
value are utility, scarcity and desirability. These factors must all
be present for land to have value.
Land that lacks utility and scarcity also lacks value, since
utility arouses desire for use and has the power to give
satisfaction. The air we breathe has utility and is generally
considered important, since it sustains and nourishes life. However,
in the economic sense, air is not valuable because it hasn't been
appropriated and there is enough for everyone. Thus there is no
scarcity -- at least at the moment. This may not be true in the
future, however, as knowledge of air pollution and its effect on
human health make people aware that clean and breathable air may
become scarce and subsequently valuable.
By themselves, utility and scarcity confer no value on land. User
desire backed up by the ability to pay value must also exist in
order to constitute effective demand. The potential user must be
able to participate in the market to satisfy their desire.
LIMITATIONS ON LAND OWNERSHIP AND USE
While land is the gift of nature, certain legal, political and
social constraints have been imposed in most societies throughout
the years. Every nation imposes certain public limitations on land
ownership and use for the common good of all citizens. Four forms of
governmental control include:
- Taxation -- Power to tax the land to provide public
revenue and to return to the community the costs incurred to pay
for the various public benefits, services and environmental
protection, which are provided by the government;
- Eminent Domain -- Right to use, hold or take land for
common public uses and benefits;
- Police Power -- Right to regulate land use for the
welfare of the public, in the areas of safety, health, morals,
general welfare, zoning, building codes, traffic regulations and
sanitary regulations;
- Escheat -- Right to have land revert to the public's
agent, the government, when taxes are not paid or when there are
no legal heirs.
FACTORS THAT CONTRIBUTE TO LAND VALUE
The physical attributes of land include quality of
location, fertility and climate; convenience to shopping, schools
and parks; availability of water, sewers, utilities and public
transportation; absence of bad smells, smoke and noise; and patterns
of land use, frontage, depth, topography, streets and lot sizes.
The legal or governmental forces include the type and
amount of taxation, zoning and building laws, planning and
restrictions.
The social factors include population growth or decline,
changes in family sizes, typical ages, attitudes toward law and
order, prestige and education levels.
The economic forces include value and income levels,
growth and new construction, vacancy and availability of land. It is
the influences of these forces, expressed independently and in
relationship to one another, that help the people and the assessor
measure value.
HIGHEST AND BEST USE OF LAND
A land site should be made available to the users who can make the
highest and best effective use of the site and maximize the site
benefits for all people. The proper system of assessment and
taxation of land can provide for the proper economic use of the
land. A high land tax on an improperly improved site tends to cause
the site holder to either better improve his site to obtain greater
return with which to pay the land tax, or to look for someone else
with the means to properly improve the site. A land tax can also
provide the source of public revenue which the local governing body
could use for the benefit of all people. Before an assessment can
proceed, the highest and best use must be determined for each site.
The economics of production should provide the atmosphere for the
most efficient use to be made of all land. The assessment process is
based on the highest, best and most profitable use of land. The
highest and best use considers only the uses that are legally
permissible (meeting zoning, health, and public restrictions),
physically possible (has adequate size, soil conditions, and
accessibility), and is economically feasible (income is
anticipated). The use that meets these criteria and produces the
greatest net earnings (best returns) is the highest and best
use.
PROCEDURES FOR LAND ASSESSMENT
An assessment (or an appraisal) is essentially an opinion of value
made by an experienced knowledgeable person. Specialists are known
as assessors who base their estimate of land market value, upon
basic economic principles which serve as the foundation of the
valuation process. Anyone can learn how to do this and learn to do
it better.
The assessment or appraisal process is an organized procedural
analysis of data. This procedure involves six specific phases, each
of which contains numerous procedures.
1. Defining the Assignment
The goal is to estimate the market value of all land sites within
a given district. This will include manufacturing enterprises,
apartments, commercial enterprises, single family home sites,
government land, farms and all other land and natural resources of
various descriptions.
The assessor should be able to support his estimate of land
market, both in discussion and in writing. The assessor must define
and use specific terminology suitable and pertinent to land
appraisal. Economic Land Rent was defined as the value paid or
imputed for the exclusive right to use a land site location or
natural resources for a period of time, generally one year.
2. Determining the Data Required and Its Source
A land market assessment system is based upon data related to land
attributes. These data generally include maps; aerial photographs;
descriptions of physical characteristics like size, shape, view and
topography; permitted uses; economic usefulness; present uses;
available utilities; proximity to town centers or employment; and
site improvements like streets, curbs, gutters, sidewalks and street
lights. Governments have much of this data available in the
different agencies.
How are values or acquisition fees currently being determined and
paid by land occupiers? Are records being maintained for the values
or fees that are currently being paid by land occupiers? If land
market values have been estimated in the past, attempts should be
made to build upon the existing systems while making constant
improvements to data collection.
3. Collecting and Recording the Data
Most governments do not have all of this information available in
a single data base capable of analysis. Assessors must determine; 1)
what land data and valuation systems currently exist, 2) how
effectively they operate, 3) how to build upon and improve these
systems and 4) how to implement procedures for collecting additional
data to improve the estimates of land values.
If no effective land revenue systems are in place they can be
created in a manner similar to the following. Assessors should
ascertain what land data presently exists and how it could be
assembled for use in a land valuation system. They should collect
and maintain the data needed from any existing records even though
it is not currently stored in a single source. They should determine
what additional data would be valuable and from what sources it can
be obtained. They should develop procedures for collecting any
additional data required to determine land market values and the
data should be collected for the differences in characteristics for
each site.
The assessor may train a small team to find and record the
additional desired data. The data should be displayed in a useful
manner such as on a land market value map or a computer printout. In
an area with no systems or data in place, simple relationships could
be drawn for permitted use (zone), distance to amenities (location),
physical characteristics (size, topography, view, and so on) and
other significant factors. Data could be collected and analyzed on a
neighborhood and type of potential use basis.
Conversations with residents and businessmen
could help to define the parameters which people in the local
community use to determine favorable land location. An interview
might reveal that the distance to transportation, such as a river,
roadway or public transportation, weighs greatly in people's
minds. Or, other factors may predominate, such as homogeneity of a
neighborhood or distance to shopping and schools. Planners,
government officials, real estate agents, appraisers and others
involved in real estate may also provide useful data.(2)
Even if no land sales or market evidence exists, the specific
factors which influence land market value are well understood by
most people in any area, even in primitive cultures. The assessor's
job is one of skillfully determining the relative priorities
identified by local people.
A sample of typical and varied land sites within a city could be
selected to demonstrate a land valuation system. Based upon a study,
land market values could be assigned by a competent assessor. The
assessor could use a few people trained to collect and analyze
existing data, then analyze the sample survey data and set standards
for the base market values in the area. The difference in market
value of the attributes that enhance or detract from a typical site
could be added or subtracted to the base market value for the other
sites in the study. These features should be recorded on the land
market map, which would show the primary sites with markets
declining as desirability decreases or increasing as desirability
increases.
Several examples of land assessment systems will be discussed in
this paper, from a simple example with no significant land data, to
a more complex example with plentiful land data. The methods
employed will depend upon the land market data that currently exists
and how that data can be assembled for use in a land assessment
system.
4. Verifying the Data
Since the appraisal process is an opinion of market value that is
not based upon the personal experience of the assessor, the data
collected should be verified with two different sources. Market data
should be verified with a person directly involved in the
transaction. For example, one party could be the selling agent
representing the responsible for the sale. Another party could be
the site user who agrees to the sale amount. Additional sources
might be government land agents or officials who have first hand
knowledge of the sale. Inaccuracies can also be brought to light by
concerned citizens if the data is made available to the public.
5. Analyzing and Interpreting the Data
The balance of this report will be concentrated on various methods
of analyzing and interpreting land market data. Several methods will
be suggested to secure the goal of estimating the market value of
all land sites.
6. Estimating the Market Values
Once the analysis has been concluded, it will be possible for the
assessor to make a rational estimate of the market value of every
land site. This estimate will serve as the basis for the value that
will be paid by a site user for the exclusive use of a location
(site). The assessor would assign preliminary land value estimates
based upon the comparative estimated usefulness and desirability of
the sites. Initially, they could accomplish this task in a general
manner, with the understanding that refinements would be made to
reflect new information and public opinion.
7. Public Examination and Analysis of the Land Market Values
The preliminary land value assessment, estimated for each site,
could then be displayed on a land market map. Public examination and
analysis of the land market values for land sites would help to
clarify any errors in assessments. People who occupy land acquire
skills in noticing slight differences in land characteristics. They
can explain to the assessor why and how differences should be
reflected in the conclusions about land values.
Once an adequate sample survey has been completed and had
favorable public review, the result can be used throughout the total
area. These sample data results could be used to estimate the
comparative markets of each land site.
To ensure the optimal and equitable use of land sites, land
assessments should reflect the attitudes of the individuals who can
make the highest and best use of the site, who would be willing to
pay more than individuals with inferior uses in mind. Those neither
requiring nor willing to pay the land taxes for a superior site
would use another site that met their needs, desire and budget, thus
making it available for others who can pay for the better site.
8. Periodic Updating of Assessments
Land market values tend to increase each year at a rate usually
greater than inflation. Building values tend to decline each year,
because of a wearing out of the physical structure or its functional
desirability. If assessments are not maintained on a regular basis
(annually) land will become greatly under-assessed and buildings
will be over-assessed in only a few years.
METHODS USED TO ASSESS LAND VALUE
Three Approaches to Valuing Real Estate
Valuation of the land involves first determining the highest and
best use of the site, estimating the value by current appraisal
theory, and reconciling to a final estimate of value.
The first step in the valuation of land is determining the highest
and best use of the site. The four criteria that highest and best
use must meet are: physically possible, legally permissible,
financially feasible, and maximally productive. Two types of
analyzes are made in determining the highest and best use. The first
is the highest and best use of the site, if vacant; the second is
the highest and best use of the site as improved, or if undeveloped
as proposed to be improved.
There are three standard approaches to estimating market value
that form the foundation for current appraisal theory: the cost
approach, the sales comparison approach and the income
approach.
The cost approach is based upon the principle that the informed
purchaser would pay no more than the cost to produce a substitute
property with the same utility as the subject property. It is
particularly applicable when the property being appraised involves
relatively new improvements which represent the highest and best use
of the land or when relatively unique or specialized improvements
are located on the site and for which there exists no comparable
properties on the market.
The sales comparison approach utilizes prices paid in actual
market transactions of similar properties to estimate the value of
the site. This appraisal technique is dependent upon utilizing truly
comparable market or sales data which have occurred near enough in
time to reflect market conditions relative to the time period of the
appraisal. This method could also be used to estimate the rental
value.
The income capitalization approach is widely applied in appraising
income-producing properties. Anticipated present and future net
operating income, as well as any future reversions, are discounted
to a present worth figure through the capitalization process. This
approach also relies upon market data to establish current market
values and expense levels to arrive at an expected net operating
income.
The resulting indications of value from the three approaches to
value are correlated into a final estimate of value for the site. It
is not always possible or practicable to use all three approaches to
value. The nature of the property being appraised, and the amount,
quality, and type of data available dictate the use of each of the
three approaches. Variations of the three approaches to value can be
devised. Several will be presented in this paper.
Specific Methods Used in Appraising Land Value
In the valuation process the land value estimate is a separate
step accomplished by applying either sales comparison or income
capitalization techniques. The most reliable way to estimate land
value is by sales comparison. When few sales are available or when
the value indications produced through sales comparison require
substantiation, other procedures may be used to value land. In all,
seven procedures can be used to obtain land value indications.
- Sales comparison -- Sales of similar, vacant parcels
are analyzed, compared, and adjusted to provide a value indication
for the land being appraised.
- Proportional Relationship -- Relating a site to a known
standard site. The difference can be expressed as a percentage.
This procedure can be used when their is little value evidence in
existence.
- Land Residual Technique -- It is assumed that the land
is improved to its highest and best use. All operating expenses
and the return attributable to other agents of production are
deducted, and the net income imputed to the land is capitalized to
derive an estimate of land value.
- Allocation -- Sales of improved properties are
analyzed, and the prices paid are allocated between the land and
the improvements.
- Extraction -- Land value is estimated by subtracting
the estimated value of the depreciated improvements from the known
sale price of the property.
- Ground Rent Capitalization -- This procedure is used
when land rental and capitalization rates are readily available,
as in well-developed areas. Net ground rent -- the net amount paid
for the right to use and occupy the land -- is estimated and
divided by a land capitalization rate.
- Subdivision Development -- The total value of
undeveloped land is estimated as if the land were subdivided,
developed, and sold. Development costs, incentive costs, and
carrying charges are subtracted from the estimated proceeds of
sale, and the net income projection is discounted over the
estimated period required for market absorption of the developed
sites.
With the appraisal process and the approaches to value understood,
it is appropriate to consider the methods and procedures used to
analyze and interpret the land data. The choice is based upon what
data is available, its reliability and usefulness in making a value
estimate.
SALES COMPARISON
This is the best method to use when appropriate data is available.
This example is based upon estimating land market data for a large
district based upon a limited occurrence of market sales but with
data available on various site characteristics for all properties.
This is based upon the actual site data and sales evidence within
the assessed district.
For 12 years, the author was the Assessment Commissioner for the
Province of British Columbia, Canada. During this time, significant
data was collected for each parcel of land. This enabled a more
detailed analysis of land value and the development and use of land
valuation systems. Computer programs were written that allowed the
annual update of land values.
The assessment profession has benefitted from the existence of
land valuation rules based upon previous analysis. The basic intent
is to provide a means of measuring and applying a rule of valuation
by sales comparability for assessment purposes.
The land market is not a perfect market, but is made up of the
expressions of all different types of persons in terms of money in
relation to potential land use. The assessor uses market sales and
site data to estimate what value would be paid for a site, assuming
a competitive market, involving knowledgeable people who are
typically motivated and acting in their own best interest.
Standard Units of Measure
Land markets can be estimated on the basis of a certain value per
unit and the unit is often one of the following:
- Per Dwelling Unit site
- Per square-foot
- Per acre
- Per front-foot
The selection of the most appropriate unit, or combination of
units, is important. It is a decision which can only be made after a
careful analysis of the market and the available data.
Land is not always sold on the same basis, but rather on the value
in the eyes of the user. No amount of mathematics can override the
main objective of achieving fair economic value, as reflected by
market behavior. This relegates the unit of measure to the role of a
means to an end. The measure can be used to assist in the
interpretation of market evidence for a few sites (the sample), so
that all of the sites can be properly estimated (the population).
The choice of a particular Unit of Measure will be dictated by
expediency. For example, the user of a condominium Dwelling Unit
will share the use of a large site, but a certain air space will
belong to them and command a different market value due to height,
access, view and preference. In urban land valuation, many of the
sites to be valued will be of similar sizes and arranged in
more-or-less orderly rows on streets, avenues, boulevards and
cul-de-sacs. Many will be of identical size with minor departures
arising from topography and shape. The assessor will probably wish
to adopt a standard site value, which includes the majority of
sites, for the particular area under review -- standard both as to
probable market value and to characteristics.
The standard residential site may respond well to a value Per
Dwelling Unit Site. A commercial use may be better estimated by
using a value Per Square-Foot or Per Front-Foot. A
farm or rural site may be better estimated by using a value Per
Acre. Once the market value per unit of measure has been
established for the standard site representative of the area, the
value will become a base to which all other sites can be compared.
Adjustments will have to be made for differences between the
standard site and every other site. The assessor will want to study
the typical differences and make individual refinements. There may
be reasons for an increase in value for characteristics which are
better than the standard site. They would make a positive adjustment
for desirable characteristics, such as superior location, view,
topography, services or access.
There can also be reasons for loss of value for characteristics
which are inferior to the standard site. They would make a negative
adjustment for undesirable characteristics, such as poor location,
longer distance to transportation, longer distance to the civic
center, wet ground in the winter, over-abundance of rock or poor
access
Site valuation may be summed up in the manner of a Unity Rating
which will be X% greater or lesser than unity (1.0) when compared
with the base standard site characteristics adopted for tile area.
Standardized Adjustments
A standardized method is the application of the comparative method
to land markets under review. Adjustments are made for divergences
from the standard site by the use of a specific set of rules. The
most common examples are those used for distance and size. The
methods were born out of the necessity to produce sound and
impartial market estimates in a limited amount of time recognizing
the accepted principles of valuation.
It is essential to use discretion and judgment and only treat
standardized methods as guides. The use of formulas should be the
result of local market analysis and testing. Sales are sought that
are similar except for the one difference that is being analyzed. A
value for this difference will result. The main virtue of the method
is its administrative adaptability, permitting land markets to be
estimated on the basis of strict comparability. Mistakes become more
easily detectable, particularly in cases of errors of judgment and
mathematics.
Following is an example of an adjustment grid and tile procedures
which are commonly used to estimate site value after considering all
differences. This shows how market values increase or decrease due
to distance, size, frontage and other important characteristic
differences.
Per Dwelling Unit Site -- Sale evidence will frequently indicate
that minor variations in sites, whether frontage or size, have
little effect on markets. The assessor could select the standard
Dwelling Unit site, both as to location and market. They would
proceed to make judgment decisions in relating the other sites to
the site that was selected as the standard site--rating them as
standard, superior or inferior. An individual site could have some
characteristics that are superior and others that are inferior. The
per Dwelling Unit site method is useful in the valuation of
apartments and homes. It may also be combined with the use of
another method such as the per square-foot method.
Adjustments for Unique Features
After the base value has been estimated, the individual sites must
be considered. Some sites have unique advantages or disadvantages
compared to other sites. Actual real estate market values vary for
each site and are dependent upon numerous individual features,
qualities, characteristics and restrictions such as:
location
utilities
topography
traffic |
zoning
use density
river
regulations |
site
view
transportation
noise |
access
frontage
parks
utilities |
People would tend to be willing to pay additional
value for a land site with special advantages and would pay less value
for a land site with disadvantages. The market value for the unique
differences would be determined by how much more or less site users in
general were willing to pay for those features. This market difference
must be determined for each significant variable feature.
The difference can then be converted to an adjustment of value.
For example, if a site were better than the standard in a district
because of distance to downtown of 5% ($4.000), site size of 5%
($4,000), location of transportation 10% ($8,000) and convenience of
recreation of 5% ($4,000), the site being appraised would be 25%
($20,000) superior to the standard site. In reality most sites have
many small differences both positive and negative from a standard
site.
SALES ADJUSTMENT GRID
Per dwelling unit site
| VARIABLE |
= |
STANDARD |
> |
SUPERIOR |
< |
INFERIOR |
| Base Value -
$ |
|
$80,000 |
|
$80,000 |
|
$80,000 |
| Downtown -
miles |
5 |
0 |
3 |
+ 4,000 |
7 |
- 4,000 |
| Size - square
feet |
10,000 |
0 |
12,000 |
+ 4,000 |
8,000 |
- 4,000 |
| Transport -
blocks |
3 |
0 |
1 |
+ 8,000 |
6 |
- 6,000 |
| Recreation -
blocks |
6 |
0 |
3 |
+ 4,000 |
10 |
- 3,000 |
| Adjusted
value - $ |
|
$80,000 |
|
$100,000 |
|
$63,000 |
Per Square-Foot -- The value per square-foot unit of
measure has application in estimating value for commercial and
industrial lands where the applied rate will be more constant over
the entire site. The size of the site limits or enhances the use and
market value of a site. The application of a market value per
square-foot to residential lands is not common.
Per Acre -- Beyond the limits of the urban area, there
will be those parcels that are so much larger that they will not
respond well or at all to dwelling unit site value, a square-foot or
front-foot unit measure. Where these larger parcels are the norm,
the unit of measure can best be expressed as a value per acre. The
adjustment factors would be completely different however. They might
relate to agricultural benefits, such as soil fertility, distance to
markets or water supply.
Per Front-Foot -- This method has been useful in the
downtown portion of intensely developed cities where people pay a
premium for exposure to customers. For those sites that are not
identical to the standard site, it will be necessary to make
appropriate adjustments for variations in width, depth and other
attributes that differ from the standard site. The total departures
from standard front-foot market can be expressed as an adjusted
frontage. It is against this adjusted frontage that the adopted
front-foot value will be applied.
There is a principle of commerce that commodities are cheaper by
the dozen. By the same token it could be that frontage feet are
cheaper per unit when the total exceeds the average, or standard
width. A width table is a series of percentage adjustments greater
or less than 1.0 needed to adjust the actual Market per Front-Foot
of any site and equate it to the Front-Foot value of the adopted
Standard Site.
PROPORTIONAL RELATIONSHIP
One method to secure a land assessment system, when sales or
rental data is unavailable, is to make an estimate of value based
upon the experience in other locations where land data already
exists. This is a variation on the Sales Comparison method. It could
be used to measure land market value or the rental value of land.
Adjustments for Use and Location
If a jurisdiction has very limited land data, such as permitted
use (zoning) and density of population, but no assessment system, it
might be possible to build a simple model. An assessor might draw a
grid, showing the potential use on the Y axis and the resulting land
market value on the X axis.
In this instance, a typical home unit site in a major city could
be assigned a base market value of 1.00 to which all other sites
would be compared. Moving toward a superior location and potential
use would influence the land market value in a positive manner.
Moving away from the base location and use to one which was inferior
would influence the land market value in a negative manner.
Adjustments for additional attributes and deficiencies could be
made for each individual site, after the base market value had been
estimated by the comparative method. The experience from a
comparative city could be borrowed and tested in the local area to
verify the results.
A chart that illustrates the relationship of one type of land use
and location, to another site of differing potential land use, can
be created. The relationships in the chart that follows have been
found to be common in many areas of the world. However, every area
is different and a new-suitable model should be designed by local
experts.
This model could be a basis for considering the distinctions that
are part of the local society of a city. It should be modified to
conform with the local experience. This can be accomplished by
performing a local investigation which draws upon the expertise of
individuals who understand the advantage that one location has
compared to another. A base factor which was equal to the
comparative difference could be determined for each use and
location. Individual sites could then be adjusted for superior or
inferior conditions as compared to the base. A determined value
could then apply to all sites resulting on equitable treatment for
varying qualities.
PROPORTIONAL LAND MARKET VALUES
| USE - LOCATION |
MAJOR CITY |
SUBURBAN |
DEVELOPING |
RURAL |
| COMMERCIAL |
|
|
|
|
| Central business |
20.00+ |
|
|
|
| Downtown area |
10.00 |
5.00 |
2.50 |
|
| Standard |
3.00 |
2.00 |
1.00 |
.75 |
| Secondary |
1.50- |
1.00 |
.60 |
.50 |
| INDUSTRIAL |
|
|
|
|
| Prime |
2.50+ |
1.75 |
1.50 |
.95 |
| Standard |
1.50 |
1.00 |
.75 |
.65 |
| Inferior |
.75- |
.50 |
.40 |
.25 |
| HOME |
|
|
|
|
| Prime |
1.50+ |
1.00 |
.75 |
.50 |
| Standard |
1.00 |
.75 |
.60 |
.40 |
| Inferior |
.65- |
.45 |
.40 |
.25 |
| RURAL AND FARMING |
|
|
|
|
| Acreage close-in |
.20+ |
.15 |
.10 |
.05 |
| Acreage distant |
|
.10 |
.05 |
.02 |
| Intense farming |
|
|
.03 |
.02 |
| General farming |
|
|
.02 |
.01- |
Basis for comparison: An home site of
standard quality in a major city = 1.00
DEVELOPMENTAL ANALYSIS
Hypothetical Building
A theoretical method to achieve a land assessment system, when
market or sales data is unavailable, is to make an estimate of the
market value of land, based upon the net land residual income (total
income, less all costs except land value). This would result from
the development of a hypothetical building of the highest and best
use for a given site.
The developmental analysis technique would be used, when the
following data can all be reasonably estimated: the best use of the
land site, the hypothetical building value, the hypothetical net
income to the development and the appropriate capitalization rate.
First, an assessor would determine what hypothetical improvements
would represent the highest and best use (greatest net land value)
for the site.
Second, to determine the net land income, the assessor would have
to estimate the gross possible income which could be earned from the
use of the improvements and site combined. An allowance for the
average vacancy (non-use) over the life of the investment would be
subtracted. Then the probable operating expenses (but excluding
income attributable to the land) would be evaluated and deducted.
Third, the assessor would have to estimate the cost of the
proposed building. A portion of the net income would be required to
recapture the investment in the hypothetical building and
furnishings. The remaining income would be income residual to the
land.
The residual land income would be available as the revenue source
(tax base) to fund public improvements and services. The entire
amount may be accumulated and utilized for the benefit of all
citizens. If a portion of the net land value were not collected, it
would be converted into a selling price and privately appropriated.
The selling price would be determined by capitalizing the
remaining net income which was not collected for land taxes. The net
markets were capitalized at a rate of, say, 6% to estimate the
market value of the land. This rate would vary for different types
and ages of property. Using a financial calculator, an amount of
$12.05 would have to be paid for a period of 50 years if interest
were at, say, 6% per year. The land price is what a potential future
user would have to pay a land owner in order to use the site, unless
all of the net rent is used for general community purposes.
An
example on a
per square foot basis |
Land
Income |
Land
Value |
| Gross
possible income |
$24 |
|
| Vacancy
allowance |
-1 |
|
| Operating
expenses |
-5 |
|
| Net income
before land taxes |
$18 |
|
| Recapture of
building cost |
-12 |
$190 |
| Land Residual |
$6 |
-$100 |
| Land Tax |
-5 |
-$83 |
| Net Land
Income |
$1 |
$17 |
ALLOCATION
When it is difficult to find vacant land sites that have sold or
are offered for sale, the assessor can use an allocation approach.
There tends to be a typical ratio of land value to property (land +
buildings) value for specific categories of real estate, with
similar characteristics, in specific locations.
The individual values for the total property (both the land and
building) may be known and available on public records, but there is
no allocation made between the land and buildings. Time might best
be spent in analyzing a sample of homes to estimate the typical
proportion of value which represents land as compared to buildings.
This percentage factor could then be applied to all of the total
market values for the similar type of homes in a given district, to
estimate the individual site land values.
If the existing practice for assigning total values has been
arbitrary or not based upon valid market conditions, this method
will not be useable. Fairness and justice would require that all
markets be based upon a competitive system where all individuals
were given an equal opportunity to use a given site. As an interim
step, an estimate of competitive total value could be made for
different types of property and locations, then an allocation could
follow.
The analysis of many units, which represent a random sample, would
be conducted, perhaps by using some of the other techniques that are
discussed. From this analysis a typical land factor (relationship),
for each type of property and location, would be determined. The
land portion would be allocated from the total value. In the sample
below, an assessor might conclude that the typical land factor was
.40 (40% land and 60% buildings).
Sample Analysis
Unit
number |
Total
value |
-
Building
portion |
= Land
portion |
Land
factor
Land/Total % |
| 212 |
$190,000 |
$114,000 |
$76,000 |
40% |
| 321 |
$181,000 |
$105,000 |
$76,000 |
42% |
| 222 |
$192,000 |
$117,000 |
$75,000 |
39% |
| 311 |
$192,000 |
$119,000 |
$73,000 |
38% |
| Conclusion:
Indicated Land Portion: |
40% |
Once the portion was determined and tested for accuracy, it could
be applied to the entire population of market data for a particular
category of real estate in a specific location. The calculation
might be made as follows:
Population application
Unit
number |
Total
value x |
Land
factor = |
Land
value |
| 215 |
$193,000 |
.40 |
$77,200 |
| 305 |
$185,000 |
.40 |
$74,000 |
| 301 |
$189,000 |
.40 |
$75,600 |
EXTRACTION
The extraction method is a variant of the allocation and
developmental methods where the market rent contribution of a
building is estimated, then subtracted from the total rent with the
balance being assigned as land rent. This was reviewed earlier, and
accomplishes a land value analysis in a simplified manner. This
could best be used where the improvements or buildings made a small
contribution to the rent, and the majority of the value was land
value.
|
Land
Rental
Income |
Land
Market
Value |
| Gross
possible income |
$24 |
|
| Vacancy
allowance |
-1 |
|
| Operating
expenses |
-5 |
|
| Net income
before land taxes |
$18 |
$300 |
| Recapture of
building cost |
-1 |
-$17 |
| Land Value
Residual |
$17 |
$283 |
| Land Tax |
-12 |
-$200 |
| Net Land
Income |
$5 |
$83 |
In this example, $5 per square foot is the net land market
allotted to the land. The land tax is $12 per square foot and the
land value is $83 per square foot.
GROUND RENT CAPITALIZATION
In many parts of the world, including areas within the United
States, land is owned by an individual or government agency and
leased to tenants who construct buildings and pay an annual rental
fee. These rental fees can be analyzed just like sales and a market
rental fee estimated. This lease fee can be capitalized by an
appropriate rate to estimate market value.
This procedure is used when land rental and capitalization rates
are readily available, as in well-developed areas. Net ground rent
-- the net amount paid for the right to use and occupy the land --
is estimated and divided by a land capitalization rate.
| Comparable ground rents |
Per SF |
Location |
Traffic |
Parking |
Adj. SF |
| Comparable ground rent 1 |
$10.00 |
-$0.50 |
-$0.50 |
+$0.75 |
+$9.75 |
| Comparable ground rent 2 |
$9.50 |
-$0.25 |
+$0.50 |
-$0.25 |
+$9.50 |
| Comparable ground rent 3 |
$10.00 |
-$0.00 |
-$0.50 |
+$0.00 |
+$9.50 |
| Subject market ground rent |
$9.50 rent per square foot /
10% = $95.00 value per square foot |
Rent 3 was the best comparable located in the same area and
required only one adjustment for traffic, Rent 2 required three
small adjustments and Rent 1 required larger adjustments. I conclude
that the subject land has a value of $9.50 rent per square foot 10%
= $95.00 value per square foot.
SUBDIVISION DEVELOPMENT
The total value of undeveloped land is estimated as if the land
were subdivided, developed and sold. Development costs, incentive
costs and carrying charges are subtracted from the estimated
proceeds of sale, and the net income projection is discounted over
the estimated period required for market absorption of the developed
sites. This is the method used by developers to estimate the price
they can pay for raw land.
| Total
sales proceeds, 50 sites at $50,000 |
$2,500,000 |
| |
Discounted at
%15 over 50 months |
$1,850,000 |
| |
Subdivision
cost, $1,000 per site |
$50,000 |
| |
Development
cost, $15,000 per site |
$750,000 |
| |
Sale cost,
10% of gross sale price |
$250,000 |
| |
Taxes,
interest, carrying cost, 10% of net value |
$50,000 |
| |
Incentive
cost and profit, 10% of gross sale price |
$250,000 |
|
| Net
value of undeveloped land |
$500,000 |
| |
Net value per
acre, 12.5 acres |
$40,000 |
| |
Net value per
site, 50 sites |
$10,000 |
LAND VALUE MAPS
The market values which have been calculated should be displayed
on a land market map. This will allow the assessor to review his
market data and market value conclusions. They can then judge
whether equity has been achieved. A field review will allow him to
make further necessary adjustments -- for other variables observed
in the review -- and finish his project. The assessor will find that
when the results of his analysis are presented, and the major
adjustment criteria utilized, the public can understand the logic of
the assessments.
COMPUTER ESTIMATED LAND VALUES
There are many jurisdictions that have both prior market value
estimates and some site data available on a computer. They may be
capable of using this data as a basis for updating market estimates.
Many government agencies have already collected
limited data about land on a computer system. (3)
By analyzing market trends, new land market estimates could be made
with a single updating factor for each permitted land use within a
neighborhood.
An entire country would be capable of annual
reassessments, updated by computer data entries. A simple model
used for computer calculation of land value or market values for
1,000,000 land sites could be based upon a careful analysis of the
market value of a sample of 12,000 sites. (4)
A local valuation committee of land experts could define the land
use classes, neighborhood areas and market values for each standard
site in the area. A Geographic Information System can be use to
display land values, characteristics and statistical data.
The advantages to using a computer assisted market update include
the abilities to:
- Facilitate frequent update of markets ensuring equitable
treatment of all renters.
- Eliminate arithmetic errors in land value calculations.
- Improve the assessor's productivity in land value assessment.
- Employ standardized assessment techniques that have proven to
be effective.
THE SOURCE OF PUBLIC REVENUE
What are the factors that cause land to have market value and to
whom does this market revenue advantage properly belong? Land has
market value for three reasons: the limited supply and "natural"
productivity of the soil and natural resources, the publicly
provided services, including planning, improvements that increase
the market value of land and the growth of communities and peoples'
competitive demand for the exclusive use of prime locations.
Land rent is the price that people and businesses are willing to
pay for the exclusive right to possess and use a good land site for
a period of time. For example, people prefer to use sites of good
location because it gives them an advantage of spending less time in
travel by being near what they choose to do and where they work. A
businessman can sell more goods at a site where many people pass
each day, compared to a site where only a few people would pass.
The collection of land rent should be used as revenue, by the
community for supplying public needs. This returns the advantage an
individual land possessor receives from the exclusive use of a land
site, to the balance of the people who live within the community and
have allowed the land possessor the exclusive use of the land site
for the period of time.
ENVIRONMENTAL PRESERVATION
It is the responsibility of the local communities to insure that
the market rent of land is collected for public purposes. When a
major part of land rent is not collected, which is the case in most
of the world today, land title holders obtain rights to sell the
value of the public improvements which were made by the whole
community. The community added to the market value to land by making
improvements which increases demand and rent for the land. The
longer the possessors hold the land out of use the greater will be
the bonus they obtain.
By prohibiting people from using good land, the possessors force
the premature use of other less desirable land, which is more
distant from the city. This raises the cost of community
improvements and the rental value of the unused, but better located,
land. This precipitates the degradation of the rural environment by
using city land inefficiently -- and creates huge unnecessary
pressures on the natural environment.
A problem that we face is that cities throughout the world are
spreading out and using land prematurely which is not needed and
should not be used. That is because failure to collect land rent
subsidizes the waste of natural resources and clutters the
environment. Cities that collect the full rental value of land are
more compact and provide greater and less costly amenities for their
citizens.
Any moves to enact good government principles without collecting
the full market rent of the land may result in a failure. People are
guided by the profit motive. When people can make a larger profit by
doing nothing, but keeping the land they possess out of use for a
long period of time, they will do so. When the community collects
the full market rent of land, they eliminate the motive for keeping
land out of efficient use, because the unearned profit has been
collected as public revenue.
Efficient land use appeals to all people because it surpasses the
political constraints of most people. Everybody understands that the
earth belongs equally to all people. They want a clean environment
on earth and to leave a healthy inheritance to the future
generations, regardless of their political viewpoints.
The major function of a competent city government is to provide
good community services by collecting the land rent created within
the community to ensure the efficient use of land and equal
opportunities for all of its citizens. Transportation is an
important function of government which would facilitate the creation
of a compact city, where people can easily find the facilities they
desire for education, commerce, religion and recreation. Good land
use, with the freedom of individuals to achieve the highest and best
use of land, would ensure a desirable community. A compact city
would reduce the need to invade the wilderness and devastate the
environment.
EFFICIENCY OF PUBLIC REVENUE
Adam Smith, in The Wealth of Nations, suggested that any "tax"
should be a charge for services which benefit all people and are
more efficiently preformed by a single cooperative effort. He
postulated four principles of taxation which any source of revenue
should meet:
- Light on the production of wealth, and does not impede or
reduce production;
- Cheap to collect, requiring few collectors, and easy to
understand;
- Certain; can't be avoided, little opportunity for corruption,
and provides adequate revenue;
- Equitable and fair, payment for benefits received, impartial,
and just.
Collecting public revenue from land rent is the only revenue
source, or "tax", that meets these criteria.
While the major argument for raising public revenue from land rent
and natural resources is because it is equitable and fair, it is
also the most efficient method of raising the revenue which is
needed for public facilities and services. Land is visible, can't be
hidden and its valuation is less intrusive than valuations of income
and sales. Taxes on labor and capital cause people to consider
alternative options, including working with less effort, which
produces less real goods. For example, a tax on wages will reduce
after-tax net wages and weaken the incentive to work. A person might
be willing to work hard for a wage of $20 per hour, but decide to
drop out if the taxes take $8 and the net wage is only $12 per hour.
Economists claim that present taxes account for a 25% loss in
production in the United States. Production and consumption would be
greatly improved if public revenue came primarily from land rather
than a wage tax. The same would occur when buildings and machinery
are taxed. The tax on building reduces the quantity and quality of
buildings produced. A tax on sales, commerce or value added reduces
consumption, production and net wealth. Sales tax evasion in the
United States has exceeded 30% in recent years.
As new inventions and more efficient ways of
producing goods are discovered, people's economic well-being is
not improved, because they have lost access to land and must pay
both rent and taxes. (5) Instead of rent
being used to provide community services, capital and wages must be
depleted, which obstructs private enterprise.
When the rent of land is taken for public
purposes production and distribution are not held back. This is
because the same amount of rent would otherwise have been taken by
some private individual. The rent would be the same, the
difference is how it is utilized. There is evidence that
communities who raise their revenue from land, rather than from
labor and capital, are more prosperous, many increasing
productivity by more than 25% (6)
HOW MUCH LAND RENT SHOULD THE COMMUNITY COLLECT?
In order to preserve the environment, it is necessary and possible
to better utilize our communities. If the producers of the land
market value (nature, government and people) don't utilize land
rent, someone else will. This is why efficient land use fails under
contemporary land systems in most countries. All countries collect
some of the land rent, perhaps 10%, 20% or 30%, but none yet,
collect all of the market rent of land.
Studies have been produced that demonstrate that communities
prosper and succeed in proportion to the percentage of the land rent
that they collect. The first communities that decide to collect all
of the ground rent will have an enormous competitive advantage over
all other communities. They will be able to reduce or eliminate
regressive taxes on labor and capital. They will attract new
business and industry and become prosperous.
To determine how much land rent the community should collect let's
consider the alternatives. Whatever is not collected will be
capitalized into market value by land owners. Buying land at
inflated market prices is a block to new industry. Land owners sell
the capitalized land rent (known as land value) which is uncollected
by the community even though it is unearned income. This causes a
disparity between landowners and non-landowners. In the United
States 5% of the population, which does not include many homeowners
or farmers, own 70% of the total national land and natural resource
values.
People will come to a well run community because they will be
better off than living by themselves or in an impoverished locale. A
city must secure revenue in order to provide good quality services.
This revenue can best be procured when the community recaptures
the value of the benefits and services that it provides. This is
done by collecting the rental revenue from land that reflects the
value of the services and facilities provided in that community. The
land rent belongs equally to all people that live in the locale who
helped to produce that value. In a well run community. there is
sufficient land rent to provide adequate funding for the social
purposes requested of, and provided by, the local city government
Cities which choose to collect land rent as their primary source
of revenue have the advantage of not requiring burdensome taxes to
be paid by workers, businesspeople, entrepreneurs or citizens.
Individuals who work to create wealth should be allowed to keep what
they produce. When labor is not taxed, greater production and
consumption occurs. Investment capital is formed which is used to
produce more wealth. New jobs are created and economic diversity
results.
Each person has a right to keep what he or she produces, but no
one has the right to waste what belongs to all people, the land
which includes the natural environment. Each person should have an
opportunity to use the best land for his business or personal needs,
as long as they are willing to pay the land rent that other land
users are willing to pay.
If the value of land rent exceeds the community's needs for public
services a method of dispensing of the surplus revenue can easily be
found. To maintain an equitable society, where nobody has special
benefits that they do not pay for, it is important to collect all of
the land rent. The community should use what is needed for public
services and improvements such as schools, hospitals, parks, police,
roadways, utilities and defense -- and reserve a fund for
emergencies.
An ethical proposal might be to then divide the excess revenue
that is not needed for public facilities and services at the end of
each year and send each citizen in that community an equal portion
of the remaining revenue. This is similar to the method used in
Alaska and Alberta. Equality of opportunity to be productive can
only be accomplished by recapturing all of the market rent of land
and ensuring that all people benefit from its value.
Not only is land rent potentially an important source of public
revenue, collecting all of it would ensure that the equal
opportunity to be productive would be available to all citizens.
People could fund useful buildings, equipment and wages, rather than
having to buy land at inflated prices. Many countries, including the
United States, were started on the premise of using land rent to
fund public services. Many countries suffer economic loss because
they no longer collect the market rent of land.
The value of land can be estimated with an acceptable accuracy, at
a cost which is very small compared to the revenue to be obtained. A
proper system of assessment and taxation of land can provide for the
proper economic use of the land. A land site should be available to
the user who can make the highest and best use of the site and
maximize the site benefits for all people. A land tax can provide a
major source of public revenue which the local governing body could
use for the benefit of all people. A land tax can prevent the
dispossession of our children, the future producers in the society.
Justice requires that land values, which are created by society and
nature, be made available for public improvements. This is the
responsibility of good government.
NOTES
1. Some economists consider there also to be a
speculative premium that must be removed. Buildings are not
considered to be land and are excluded from any discussion of land
taxes. [go back]
2. Additional land characteristics and sources of
information can be found in the manuals property Appraisal and
Assessment Administration and Land Valuation by the
International Association of Assessing officers, 1313 East 60th
St., Chicago, IL 60637.
Training Course in Land Valuation Techniques written and
taught to Land Assessors of Jamaica in October, 1990, By Ted
Gwartney, Tgwartney@aol.com
[go back]
3. When the author was City Assessor in
Southfield, Michigan, the only land data available on the computer
system were the original land value estimates, an identifier for
the permitted use and a neighborhood (location) classification,
made years earlier. [go back]
4. When the author managed the British Columbia
Assessment Authority, we were able to value 1,350,000 land parcels
annually, using a land valuation computer system, which considered
all land attributes, zoning, physical features and market demand
factors. A multiple regression analysis system was used for the
analysis of sales and testing of results. [go
back]
5. Many books have detailed this dilemma. Perhaps
the best known is Progress
and Poverty by Henry George, published by the
Robert Schalkenbach
Foundation, 149 Madison Ave., #601, New York, NY 10016. [go
back]
6. The Losses of Nations, Fred Harrison,
Ed., Othila Press, London, 1998. [go back]
