Could Tax Reform Prevent Gentrifying Effects of TOD?

Across the country, there is rising concern that the economic growth and development spurred by the construction of transit infrastructure may be pushing out those very residents who rely on the service for their daily commute and personal mobility.

Rick Rybeck of Just Economics, a DC-based consulting firm, has proposed a potential solution in the form of a two-prong approach to tax reform: "lower the property tax on building values and raise the property tax on land values." While, "[a] lower tax rate makes [buildings] cheaper to construct, improve, and maintain," explains Rybeck, "a higher tax on land values can keep costs from spiraling out of control based on real estate speculation," says Jamawat.  

"This tax-based strategy is essentially a way of rewarding the developer for creating positive externalities (e.g., increasing the supply of affordable housing in TOD) and encouraging landowners to put their lands to the highest and best use."