Property owners enjoy a de facto tax break when they waste valuable land Downtown by using it as a parking lot instead of something more productive. Take these two lots on the 200 block of East Washington Street. Lot A is a Bank and Lot B is a surface parking lot.
City Hall says that Lot A is worth $362,000 and Lot B is worth $1,071,000. Despite that, TIMWIN LLC, the owner of Lot B, pays $47,904.87 in annual property taxes while KeyBank, the owner of Lot A, pays $133,739.39—almost 3 times a much.
KeyBank pays so much more even though its land is worth so much less because it’s actually putting its land to good use. Lot A has an actual building on it—a four story bank branch. City Hall assesses the value of that full property—the land plus the building—at $3,134,000. Meanwhile, the full value of Lot B is only $1,094,000 because TIMWIN is letting it languish as a parking lot.
This is a problem across Downtown. Property owners just sit on valuable land without doing much at all to improve it. They make the City worse off, and they get a tax break for doing it.
The solution is to tax parking lots as if they were developed. The building on Lot A increases the lot’s value by 866%. Put a surchage on Lot B’s tax bill as if it were developed to the same intensity, and TIMWIN LLC would have to pay $395,676.48—more than 8 times as much as they do today. To make that payment, TIMWIN LLC would have to actually develop the property so that it could generate more revenue.
That new development could take a lot of different shapes—housing, retail, office, space, whatever—but anything would be better than a parking lot. Tax reform can make it happen.