* Section 19 & 20: Real Estate Taxes and Zoning Regulations
Taxes and Assessments
Real estate taxes take priority at a foreclosure sale.
General Assessment Tax
A tax on land and improvements (structures like houses or barns).
Raw land is taxed.
Improvements on the land are also taxed.
Funds go towards public services (schools, police, fire protection).
Ad Valorem
Based on value; higher property value leads to higher taxes.
Local governments reassess property values to reflect current market value.
Calculating Real Estate Tax
City Adopts a Budget: Determines the total funds needed.
Estimate Market Value: Tax assessor estimates the current market value of properties by class (residential, commercial, agricultural).
Apply Assessment Rate: Multiply the market value by the assessment rate.
Assessment rates are set by individual states.
Example assessment rates:
Commercial: 32\%
Residential: 19\%
Agricultural: 12\%
Formula: Market Value × Assessment Rate = Assessed Value
Example: \$100 \times 40\% = \$40 assessed value
Determine Tax Rate: Divide the total budget needed by the total assessed values.
Formula: Total Budget Needed / Total Assessed Values = Tax Rate
Example: \$500,000 / \$10,000,000 = 5\% tax rate
The total assessment amount (\$10,000,000 in the example) is known as the tax base.
Tax Rate in Mills: A mill is one-tenth of a cent or one-thousandth of a dollar (\frac{1}{1000}.
Mill means "per thousand."
Example: \$50 per thousand = \$5 per hundred = 5\%. A tax rate of 50 mills is the same as 0.05 or 5\%.
Calculate Property Tax: Multiply the assessed value by the tax rate.
Formula: Assessed Value × Tax Rate = Real Estate Taxes Owed
Example: \$40,000 \times 5\% = \$2,000 in real estate taxes
Special Assessment Tax
A real estate tax for specific improvements that benefit certain properties (e.g., sewers, sidewalks).
Only properties benefiting from the improvement pay this tax.
If there are two real estate taxes, the older one takes priority.
The "Power Principle" Formula
A formula to solve math problems related to percentages. It centers on the letters P, W, and R (Part, Whole, Rate). The formula is:
\frac{P}{W} = R or P = W \times R or W = \frac{P}{R}
P: Part (smaller number) - placed on top.
W: Whole (larger number) - placed on the bottom left.
R: Rate (percentage) - placed on the bottom right.
Using the Formula
Top to Bottom: Divide the top number (Part) by one of the bottom numbers (Whole or Rate).
Left to Right: Multiply straight across.
Examples
Finding the Rate: Divide the Part by the Whole.
Problem: 10 is what percent of 50?
Solution: 10 / 50 = 0.20 = 20\%
Finding the Part: Multiply the Whole by the Rate.
Problem: What is 20% of 800?
Solution: 800 \times 20\% = 160
Finding the Whole: Divide the Part by the Rate.
Problem: 60 is 30% of what number?
Solution: 60 / 30\% = 200
Zoning and Planning
Master Land Plan
The city's plan for future growth.
Outlines how growth will occur over time (e.g., 15 years, 30 years).
Buffer Zone
Separates two incompatible areas (e.g., commercial and residential).
Examples: parks, vacant ground, fences, berms.
Also used between federally regulated wetlands and developments.
Types of Zoning
Cities zone areas for specific uses (residential, commercial, agricultural) to maintain orderly growth.
Zoning falls under police power.
Planned Unit Development (PUD)
Different uses (houses, shops, schools) in one area.
Requires special zoning:
Overlay zoning
Cluster zoning
Density zoning
Down Zoning
Changing from a more intensive use to a less intensive use.
Example: Multifamily structures to single-family structures.
Exceptions to Zoning Laws
Nonconforming Use
Similar to a grandfather clause; property use existed before current zoning laws.
If zoning changes, the existing use can continue.
If the structure is destroyed, it cannot be rebuilt under the nonconforming use.
Variance
Exception to current zoning after zoning laws are in place.
Requires application to a planning board or zoning commission.
Typically for small, minor deviations.
The zoning itself does not change, but the property is allowed a specific exception.
Spot Zoning
Rezoning one particular spot to be different from surrounding areas.
Must be justified for the public good.
Changes the zoning of that specific spot.
Subdivision Creation
Governmental Regulations
Cities mandate requirements for subdivisions (streets, sewers, easements).
Subdivider vs. Developer
Subdivider: Separates land into lots for sale.
Developer: Improves lots, builds houses, puts in streets and sewers, analyzes the market to ensure the subdivision is viable.
Deed Restrictions
Put in place by private developers (e.g., no RVs, fence types).
If there is a difference between governmental regulations and private deed restrictions, the most restrictive of the two takes precedence.
Dedication
When a developer voluntarily gives land to the government (e.g., for a public school).
Benefits both the city (free land) and the developer (attracts homeowners).