{"id":685,"date":"2011-01-25T15:26:37","date_gmt":"2011-01-25T20:26:37","guid":{"rendered":"http:\/\/www3.law.harvard.edu\/journals\/hlpr\/?p=685"},"modified":"2015-10-02T15:59:28","modified_gmt":"2015-10-02T15:59:28","slug":"holes-in-gentrification-2","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/lpr\/2011\/01\/25\/holes-in-gentrification-2\/","title":{"rendered":"Holes in Gentrification"},"content":{"rendered":"<p style=\"color: #505050\"><em>Yevgeny Shrago\u00a0<\/em><\/p>\n<p style=\"color: #505050\">I visited Washington, D.C. last weekend and walked around the rapidly gentrifying Columbia Heights neighborhood. While admiring the fantastic looking\u00a0<a style=\"font-style: inherit;color: #3f6dcf\" href=\"http:\/\/web.archive.org\/web\/20110319011748\/http:\/\/www.dcpreservation.org\/endangered\/2007\/2007_05_29\/1338%20-%2068%20Perry.JPG\" target=\"_blank\">old houses<\/a>\u00a0and the shiny\u00a0<a style=\"font-style: inherit;color: #3f6dcf\" href=\"http:\/\/web.archive.org\/web\/20110319011748\/http:\/\/www.dccondoloft.com\/wp-content\/uploads\/sites\/89\/2009\/11\/columbia_heights.jpg\" target=\"_blank\">new development<\/a>, I noticed dozens of abandoned houses dotting the streets.\u00a0 These weren\u2019t houses in the process of being gutted and rebuilt.\u00a0 They were simply boarded up and vacant. With the way property values have\u00a0<a style=\"font-style: inherit;color: #3f6dcf\" href=\"http:\/\/web.archive.org\/web\/20110319011748\/http:\/\/dc.urbanturf.com\/articles\/neighborhoods\/columbia_heights\/\" target=\"_blank\">shot up<\/a>\u00a0in that area since the D.C.\u2019s metro put in the Green Line\u00a0<a style=\"font-style: inherit;color: #3f6dcf\" href=\"http:\/\/web.archive.org\/web\/20110319011748\/http:\/\/en.wikipedia.org\/wiki\/Green_Line_(Washington_Metro)#Resolution_of_controversies\" target=\"_blank\">ten years ago<\/a>, I was shocked that so many houses could still be abandoned.\u00a0 The explanation I came up with comes from a piece of tax policy known as fractional assessment, which means that only a small percent of a house\u2019s actual value is taxed.\u00a0 This policy\u00a0<a style=\"font-style: inherit;color: #3f6dcf\" href=\"http:\/\/web.archive.org\/web\/20110319011748\/http:\/\/www.sup.org\/book.cgi?id=15910\" target=\"_blank\">became enshrined in statute<\/a>\u00a0in large part to protect homeowner\u2019s from the effect rising property values would have on their tax bills.<\/p>\n<p style=\"color: #505050\"><!--more--><\/p>\n<p style=\"color: #505050\"><span id=\"more-2916\" style=\"font-style: inherit\"><\/span>By ensuring that incumbent owners don\u2019t have to pay the full gains in the value of their homes, fractional assessment lowers the opportunity costs of not developing the properties. Owners of these properties, who may not wish to develop the property themselves, can sit and wait for the neighborhood to grow increasingly expensive, without having to pay a massive tax bill every year.\u00a0 This can lead to a supply constraint in \u201chot\u201d neighborhoods like Columbia Heights, further increasing prices there.\u00a0 Since home prices are heavily based on previous sales in the same neighborhood, letting the last few houses slowly trickle out onto the market, with intense competition for each, can lead to a permanently higher equilibrium price.\u00a0 Fractional assessment harms the city\u2019s tax rolls and leaves unsightly buildings in developing neighborhoods. \u00a0 It ultimately diminishes the affordable housing stock in a city.\u00a0 While this post oversimplifies the tax and regulatory issues affecting economic development, a subject on which I\u2019ll provide future posts, it\u2019s clear that fixing fractional assessment would be a good start to ensuring stable municipal tax bases and affordable housing.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Yevgeny Shrago\u00a0 I visited Washington, D.C. last weekend and walked around the rapidly gentrifying Columbia Heights neighborhood. While admiring the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-685","post","type-post","status-publish","format-standard","hentry","category-blog"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZQka-b3","_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/comments?post=685"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/685\/revisions"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/media?parent=685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/categories?post=685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/tags?post=685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}