Comments On the Probability of Rezoning
Real Estate Issues › Vol. 32 Nbr. 2, October 2007
Linked as:
Summary
The "probability of rezoning" rests on the issue of legal permissibility, which can be used as a barrier to entry. The result is a flawed rezoning process. The barrier violates the perfectly competitive conditions in the market. The "probability of rezoning" is an educated evaluation (an expert's judgment) about the action that will be taken by the authorities of a local jurisdiction who have the power in the zoning ordinance to impose restrictions on land use. The zoning ordinance and the comprehensive land use map are developed with the best of intentions. This article calls for the appraiser to move away from attempting to judge the "probability of rezoning" because it is a judgment about an impediment in the free market that is subject to manipulation and monopolistic control by the local government. The judgment about the "probability" of rezoning relies, in part, on market information. Zoning officials can affect the outcome of a rezoning request for a variety of reasons.
See the full content of this document
Extract
Comments On the Probability of Rezoning
IN THE SPRING 2007 EDITION OF REAL ESTATE ISSUES, THE concept and definition of highest and best use was discussed in the article, "Comments on the Concept and Definition of Highest and Best Use." which can be accessed online at www.cre.org/publications. Several conclusions regarding highest and best use (HBU) were discussed, including the definition of market value and legal permissibility's impact on HBUs. The definition of market value is based on the economist's perfectly competitive market in which there are no barriers or obstacles to the entry of new firms or the exit of existing firms. Legal permissibility in the HBU process often is a barrier to entry. Because legal permissibility contains an element of manipulation, it could negatively influence the HBU, thus retarding the highest present value to the land or return on improved property. HBU determination and analysis can be flawed if legal permissibility is contrary to the economics of the property market.
THE PROBABILITY OF REZONINGThe "probability of rezoning" rests on the issue of legal permissibility, which can be used as a barrier to entry. The result is a flawed rezoning process. The barrier ...See the full content of this document
Sponsored links
