Gaming the Economic Development System

Once again, it appears that “build it and celebrate it” no matter the past sins (or future consequences) reigns supreme among economic developers. While hyping an announcement of more jobs and new construction in Greater Lansing, the fact that the insurance company in question challenged its property taxes using the “functionally obsolete building” scheme in 2010 was conveniently overlooked (see article in City Pulse).

Source: freep.com

If you are not familiar with the “functionally obsolete” tax game that is being employed most often by big box retailers, the claim that is made is their building is “functionally obsolete”  because it was specifically designed and built for their purpose and no other entity could possible adapt it. Needless to say, the whole argument is rather sketchy, but unfortunately, state tax tribunals have been swallowing it hook, line, and sinker. This argument might be plausible or reasonable if the structure was 20+ years old, but it is also being made for newly/recently constructed buildings. The story in the May 8, 2013 edition of City Pulse is an example of the same scheme being used for an office building. Exactly how hard is it to move cubicles, desks, and partitions?

The professional planning community needs to address this issue and fast. If a building is to become so dysfunctional (or functionally obsolete) so quickly, should it be approving for construction in the first place? And if it means the local property taxes are going to soon take a backhanded hit in the process, even more reason to deny the project unless the applicant certifies the building will be erected In an manner that is not dysfunctional (a.k.a. functionally obsolete).

Most special use (or conditional use) permit approvals require a community to determine whether the use “will not be detrimental to the economic welfare of neighboring properties or the surrounding community.” If the proposed building is to become “functionally obsolete” within ten years, no realistic or reasonable decision maker should approve its construction. Otherwise, all they are doing is losing badly at a zero sum game.

– Rick Brown

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Filed under architecture, Economic Development, Editorial, Featured, Headline, Politics, Real Estate, The Media, Urban Planning

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