Who owns the land?

Author:Binnings, Tom
Position:THE ECONOMIST

HEADLINES HYPE RANCHERS OCCUPYING public lands while insisting they have rights to use the land without compensating the federal government. What we seldom hear about are private ownership rights under the control of local governments. Today the land development process in Colorado is often met with municipal governments wanting only retail and commercial development so their community can generate sales and property tax based on high commercial, instead of low residential, assessments. Some local governments also assume residential development creates a net cost to communities rather than a net benefit. In the ideal world of municipal financial officers, communities would have the entire retail tax base while neighboring residential communities get the social burden. This is a tragic form of community development that appears to be worsening along much of the Front Range.

Urban economists are interested in how communities are born, grow, mature, decline--and are sometimes reborn. In addition to assisting planners as they design urban landscapes and develop property constraints to support sustainable local visions, economists must also consider the vagaries of the market. What does the market want and can the needs be met in a viable manner? This is where urban economists tend to have a greater affinity for the developer who attempts to allocate scarce capital without taking unwarranted risks. Unfortunately, the capital required is substantial and the greatest risk faced on the front-end is dealing with uncompromising and slow moving planners, politicians, bureaucracies, fire departments, building authorities, etc.--each with their own agenda.

Communities are developed and redeveloped by real estate experts. In much of America, private interests own land, but that property ownership is limited, in theory, for the common good. The rapid growth of constraining property rights really started in the 1950s. This is about the same time economists and lawyers began addressing negative externalities whereby actions benefitting me and costing you should either be prohibited or I should compensate you or the government for the cost created. There was also the notion that planners and local officials...

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