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Old Posted Mar 28, 2019, 3:03 AM
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iheartphilly iheartphilly is offline
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Join Date: Nov 2012
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Yep
Quote:
Originally Posted by allovertown View Post
To the first point, that's simply not correct.

When a parking lot is sold to a developer for millions of dollars and many times what it was assessed for tax purposes, the purpose of the lot hasn't changed yet. It is still a parking lot at that point.

The land doesn't become worth more when it is improved. It IS worth more because it CAN be improved. Assets are worth what someone will pay for them, it's pretty straightforward. Improved or not, the location of these lots, their zoning, etc, is what makes them valuable and that's why people will pay huge sums for them well before the lot is ever improved. If every time a parking lot sells in the center city area it out performs by an insane percentage what the city assessed it for tax purposes, it's pretty clear that the city is habitually under assessing these types of lots.

Taxing parking lots or vacant land accurately, doesn't mean taxing them as though there is a trophy tower built on the land prematurely. It simply means taxing them what they are actually worth and what people routinely pay for them as empty lots. Once something is actually built on the lot and the purpose of the lot actually changes, then the property is worth even more. But these lots are valuable as parking lots and it is time they are taxed that way.
The actual value of that lot is at present value and operating as a parking lot and should be assessed as the value of land/lot as a parking lot, and not what it can hypothetically be at a future point in time. In other words, it is being discounted for its use as a parking lot. You can not completely dismissed the parking lot piece and treat the lot with its use as a parking lot for something else. Once a developer is will to pay x amount over actual assessed value, the developer's intent of that parking lot/land is telling. The developer is not paying x many times over (sometimes in the millions as you said), to operate it again as a surface parking lot. So here the discount doesn't apply, because the intent of selling the lot to a developer is for the developer to put some kind of building that they think is worth what the surround buildings are worth or at least command some premium rental price per square footage. So until that changes, i don't believe the guy operating the parking lot should be assess some tax percentage in the millions because someone could potentially be paying for it for some other use in the future that is not a parking lot.

We differ on this, but I am not incorrect. We have a difference of opinion of how this stuff is assessed. I'm sure a case could be made to increase the valuation when it is truly under assessed, like comparing the assessment of another surface lot a block or two away. Plus where would the guy operating that parking get enough revenue to pay taxes if assessment was in the millions and also have enough to pay his employees and other overhead. It doesn't make sense. Many small businesses, sole proprietors, family businesses would be forced to close their business if done this way. Even in Manhattan, you still see small businesses and mom/pop in close proximity to the pricey neighborhood when it is held generationally. If they apply the value of the land to a high-rise on top of it, you wouldn't have anything except big corporations that could afford the rent or that if it becomes unprofitable to run a business there and it eventually moves. And, maybe that is the direction it will eventually go because big corporations can do it because the guy retires and want to sell for maximum profit.

Last edited by iheartphilly; Mar 28, 2019 at 3:18 AM.
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