Inflation, as in a weakening dollar? Or hyper-inflated land values?
The original Kidd Valley restaurant, which opened in 1976, will be permanently closing, according to a Facebook post from Kidd Valley.
Located on Northeast 55th Street near Ravenna Park and originally opened in 1976, the 800-square-foot restaurant needed to be remodeled to bring it up to code for the Americans with Disabilities Act.
Hmm, I wonder…what’s the value of the land under that burger joint?
Well, now. The burger joint itself has been a $1,000 teardown since the year I moved to Seattle. But look at the value of the land since then…
About 1/10 of an acre valued at one and a half million dollars. Why is it worth so much? And why did it rise so quickly?
- It’s right near the University of Washington, within blocks of a very densely populated student quarter
- It’s on an arterial with frequent bus service
- It’s also near a very successful shopping destination
All this as Seattle’s population increased from around 600,000 to 750,000…about 25% more people with a steep rise in land values/prices.
Which of those items did the owners of Kidd Valley build? At best you could argue their taxes helped fund the transit service. But the rest of it? All built by the community around it. Sure, they own the value of the business, the loyalty to the brand, the reasons why people go there. But the land value? Not so much. A vacant lot would command a high price at that location.
In a way, they are right: if they were to tear down and rebuild that 1960 building, it would be assessed at far more than the $1000 it’s valued at now. So they would be paying that onerous 1% or so on the $1.5 million in land with perhaps another $1 million on the new building. Maybe that doesn’t pencil out for a fast food restaurant, no matter how good the location is. And that’s fine. Let the land be repurposed. We’re not talking about cutting down the redwoods here: this is land that has already been developed multiple times.
So they are sitting on land valued at $15 million per acre. One could extrapolate that value along that corridor for a few blocks in either direction: how would one assess a land value tax there? Probably more than $13,364.34 per year, I think (and paid to an address outside Seattle, so Seattle doesn’t even get the paltry tax anyway).
If you turned the property tax into a ground rent/and value tax — maybe raise it by a factor of ten as the value of the location increases — the decision to move on would have happened 10 or 15 years ago, freeing up that land to find it’s highest and best use. Perhaps as a multistory mixed-use building with a Kidd Valley at the street level and 3 stories of residential above it. Look just down the street and see the dense development across from the University Village mall. Assess the value of the land at it’s most remunerative use, manage the improvements at a lower rate with zoning and land use guidelines to let developers maximize that value, and stand back.