Friday, October 19, 2007

Want to Help Out People Being Foreclosed Upon? LOWER PROPERTY TAXES!

Minneapolis, as you've surmised, is like any other major city in the US in that there's a leftist core and pretty much all the wealth producers have escaped to the suburbs. Oh sure, some like me who detested the concept of suburbia with the latest in Ambercrombie and Fitch and trophy wives driving aimlessly in an urban assault vehicle, stayed in the city, insistent the culture and "realness" of city life made it worth the lefter leaning yard signs and the occasional towing of the car and continued to contribute to GDP. But after your place gets broken into, the cops give you 2 rolling stop tickets because they're bored and the city of Minneapolis jacks up your property taxes 300% in 6 years with no noticeable improvement in city services or schools, all of the sudden having the appetizer platter at Applebee's, wearing the latest in Ambercrombie and Fitch doesn't look so bad.

And so I fled.

But now, like in pretty much every other major city throughout the US, city council members are scrambling to secure votes in the next election by calling for some level of assistance in helping the unfortunate people in their city that are facing foreclosure. Some advocate "crisis lines" to help people figure out a way to avoid foreclosure. Others are advocating bail outs calling on state and federal tax payers to bail their citizens out.

But here's a crazy idea I had. How about you lower the freaking property taxes? In many cases the reason people are facing foreclosure is that their ARM has reset and now they must shell out an additional $50-$100 a month (I'm not kidding, I've heard and read stories where they can't afford an extra $50-$100 a month). Well if that's the case, and so many of these poor unfortunate home owners are at risk of losing their homes, why don't you lower the property taxes to help them out? That would probably do more to help them keep their home than a crisis line.

Beyond which, lowering property taxes will also help in another regard;

It will increase the value of homes in the city.

In increasing the property taxes, what cities have done is decreased the net rents that can be received from renting out the property. The supply and demand for apartments and rentals is more or less independent of property taxes. Thus market rents are set. So if property taxes are increased, then the landlord must eat the extra costs. He can go ahead and try to increase rents to offset the increase in property taxes, but with so many affordable housing developments, chances are he's just going to have to eat it.

With these lower profits, this decreases the market value of a house or rental property. One of the three major valuation techniques used by appraisers is income approach, looking at what cash flows the property will provide. If property taxes were to be lowered, this would increase the net cash flow provided to the owner, and thus the appraised value of the property.

Of course the likelihood of this happening is zero. Most major cities' city councils are far left leaning, even Minneapolis has a Green party member if I recall correctly. And, if you were foolish enough like me to contact your city council member in the hopes of getting your property taxes lowered, you are always told there's not enough money and the reason your property taxes went up was through some weird, tangled logic that inevitably blamed the evil Republicans at the state. This is because democrats, socialists and other lefter leaning sorts stay in power by raising taxes on a minority and transferring the wealth to the majority effectively bribing the masses. So they are not going to lower taxes, even if it is on the poorer folk, because it's not in their nature. if anything, they're going to raise taxes on the rich and then try to provide some government service or program to bail these people out.

Thus, it seems time again to bring out what the left hates the most, and that is facts and statistics.

According to the City of Minneapolis property taxes have gone up 60% since 2000. Inflation however, has only gone up 20%.

Right off the bat you can tell, mathematically, that there is enough room to cut property taxes and provide these people a little relief. Secondly, and albeit anecdotally, instances of the city blowing money on a $200 million library, who knows how much on "green roof tops," and I recall a "sculpture" which was nothing more than a cube I saw in the city park that after some investigation I found cost $50,000 (If anybody wants me to make a cube, I'll cut them a deal for $30,000. We'll call them "Captain's Cubes" and I'll sign them and you can put them in parks or in your yard or something). Regardless, as always there is plenty of fat to trim from the city budget and pass onto the people.

The question is whether the council members are going to help out those unfortunately facing foreclosure with real help or whether they're going just help themselves.

I'm just happy I'm in the burbs.

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