The Court Room, the Ballot Box, and the Market Place (3 of 4)
To Entice Investments And Attract New Business
The business improvement District was established to provide funding, collected from business property, to entice investment and to attract new business to Main Street. As indepth studies were made it was noted that there were very few vacancies on Main Street. Where some people claimed that as much is 40% of the space in the central business district was vacant and unwanted, a more careful, direct, and detailed study, showed that the vacancy rate was probably less than 10%. Of course the competition from new space established in the surrounding community did lead to reduced rent rates for the space in town. Because the rent value of property directly affects the market value of property, it has been noted that there is some shift of the real estate tax burden from the downtown commercial properties that have lost some value to residential properties that have held their value.
Government Intervention Does Not Improve Value
We hear talk of changing the zoning so as to prohibit professional offices, and in fact any use other than retail or restaurants on the ground floor level of Main Street Flemington. The people proposing this sort of change think the space occupied by offices of any kind will immediately fill up with stores and other retails uses. They do not appear to understand that they might, by such change in zoning, be reducing the value of property, and doing so might lead to more, rather than less, vacancies with such a change. Also offices on the ground floor are “grandfathered” and can remain so long as the space is occupied by offices. Government intervention, of the suggested type, that is imposing restrictions on use, usually does not improve value. Such a zoning change is likely to lead to a further shift of the tax burden to residential property owners.
Perhaps from feeling desperate, and with fear of not being reelected, the local government leaders reached the conclusion that the market alone, with time, would not improve the value of property on Main Street as quickly as they would like to see value improvement accomplished. They therefore took the position, that can only be described as one of desperation, by declaring that central Main Street property was a slum of abandoned property and thus was in need of redevelopment that could not be accomplished by the market under present conditions.
The local government leaders thus declared the central portion of town is an area "in need of redevelopment". State law allows such declaration, in areas of extreme economic depression, as is found in some areas of the state where the property can best be described as "slum" property. We see this law used in Camden and in some places in Atlantic City, for example. In many of these locations the property so declared is of such a nature that it has no prospect for use unless buildings are torn down to the bare soil. In order to give developers an incentive to come in and acquire the property, tear down the buildings, and build something that would generate more tax revenue, usual zoning and other land-use requirements are relaxed and perhaps waived. In many cases the government contributes actual cash tax money to the process in order to attract development to areas where there is truly no other hope. Is that the case in Flemingtton? I think not. What do you see? What do you think? (to be continued)