How a Land Value Tax Could Help Relieve the Housing Crunch in Gasland

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If an area is experiencing high demand for housing, as reflected in high rents or low vacancies, then they need to build more housing. Doesn’t matter whether it’s popular neighborhoods of Philly and Pittsburgh, or Gasland.

Susan Phillips:

Back in February, WPSU’s Emily Reddy reported on a new phenomenon in places where shale drilling has boosted the local economy — homelessness. The influx of out-of-state drillers in need of places to stay has put pressure on the low-income housing stock in heavily drilled areas of the state. The good news is a hotel building boom. But for many, rising rents have left them out in the cold, creating a homeless population for the first time in places like Tioga County.

Now the Pennsylvania Housing Finance Agency has a pool of money to hand out for low-income housing projects in drilling areas suffering from a new housing crunch. The Pennsylvania Housing Affordibility and Rehabilitation Enhancement Fund, or PHARE, will provide $2.5 million collected in 2011, and an additional $5 million each subsequent year. Funds from the Impact Fee will also become available.

I think we should first take a look at whether the local zoning regulations are too restrictive before we start committing state money to building government housing projects or subsidizing development. Why isn’t real market demand translating into more private developers building more rental housing? Do the zoning laws in the areas in question allow multi-family housing? Are there mandatory large lot sizes? What kind of red tape is involved in getting a multi-family building built?

The other issue is that there’s obviously a lot of land speculation happening in areas with a lot of gas drilling. Landowners who could be building housing are hanging back, waiting for rents to go higher before they start building.

That’s a situation where a land value tax is going to be very helpful. A land value tax is a direct tax on land speculation – on waiting to build. People who are just monopolizing valuable land, rather than using it for production, end up paying a lot more than under a traditional property tax on assessed building value. Taxing land values would not only help these municipalities extract more public benefits from the gas drilling bonanza, but it would push landowners to build housing sooner, alleviating the housing crunch.

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One Response to How a Land Value Tax Could Help Relieve the Housing Crunch in Gasland

  1. Rick Rybeck says:

    Excellent article. Reducing property tax rates on buildings would help make both residential and commercial buildings cheaper — and this would be good for residents and businesses alike. To compensate for lower building taxes, higher land taxes would help motivate infill devleopment of vacant lots and boarded-up buildings. Moe information can be found in an article, “Break the Boom and Bust Cycle.” It can be found at http://webapps.icma.org/pm/9407/public/cover.cfm?author=Rick%20Rybeck%20and%20Walt%20Rybeck&title=Break%20the%20Boom%20and%20Bust%20Cycle&subtitle=