In a city, you're more dependent on the government to take care of things, and in most US cities, with single party control, it does not happen. They don't take care of crime. They let infrastructure decay. The schools are crap (despite high per-pupil spending). They make crony deals with the unions on pensions and benefits that are not possible to fund.
Not feeling safe and with a bleak future for their kids, people move out. I've seen this happen over and over again with coworkers who initially were big on city living, but eventually moved out when they got mugged or had kids.
The result is insane taxes as population leaves, and subsidies from the surrounding areas to try to keep the failed city afloat.
The high taxes and obvious government incompetence then act as a moat to keep people out.
I like that Land Value Taxes hurt anyone hoarding land to ride the rising assessments (which is a major problem today). But I don't like that LVT punishes people for productively using land. Land Value Taxes apply pressure to make the highest capital return on every piece of land, which is not the same thing as the best use of the land, and would hurt many good uses of land that are not profitable.
> In a city, you're more dependent on the government to take care of things, and in most US cities, with single party control, it does not happen.
Yep. And what's worse, most cities intentionally want to make all of these things worse.
Cities are often intentionally destroying their infrastructure (tearing down useful-but-unloved infrastructure for useless-but-pretty replacements) and intentionally destroying their affordable housing (purposefully gentrifying areas of their cities, to drive out residents deemed undesirable)
The cycle of driving people out of the city by attacking housing/transportation/services is not an accident, it's not happenstance. This is an intentional design goal baked into how they frame every problem and how they approach every change. It's not something anyone will admit to upfront, but if you travel through Urbanist circles long enough, you can get into the behind-doors conversations they have and see this in action.
> I've seen this happen over and over again with coworkers who initially were big on city living, but eventually moved out when they got mugged or had kids.
Yep. And if you escape the crime or the school problem, they'll hit you on housing or transportation instead. There's no escaping the never-ending list of problems forced upon residents.
Suburbs are the place for affordable housing. Suburbs are for functional schools. Suburbs are for sustainable living. Suburbs are for decent infrastructure. Suburbs are for diversity, especially on the low-income/working-class side of things. Suburbs are the place you begin your startup in a garage, because Suburbs are the only place cheap enough that a regular person could have a garage at all.
Cities aren't for people. Cities are for the conglomeration of capital, and capital alone. Humans need not apply.
(highest and) best use  is generally understood as maximizing economic return, so you're essentially arguing semantics here.
with that said, i agree with the underlying sentiment that it's not the only "return" we should consider. maximizing economic return fails to capture the richness of the human experience in often obvious but not easily quantifiable ways, which is why we let economists get away with such unrealistic models.
but your position on suburbs (vs. urbs) is baffling (and idealistic). suburbs externalize their costs to achieve that cheap living. implementing an LVT would (presumably) take that advantage away.
Typical monthly payment was $300/month, and they had a low default rate, so it was still a decent deal. But it wasn't just $1.
House flipping is a career for some people. Every last one of them look at probable resale value after remodel in comparison to expenses required to reach marketable condition. No flipper would do $100k of work on a house when the neighboring properties simply don't sell at any price, and tend to remain vacant after foreclosure.
And that's the "location" factor talking. I don't know if it's the first, second, or third "location" in the list, but if a city culture or city government sucks, people and businesses don't want to move there.
I have seen it in every city I have lived in. The local government takes ever-increasing amounts of your money, and digs entirely separate holes to throw that money into, rather than any of the naturally-forming potholes on every street that isn't part of some councilman's route to city hall. The governance that worked with steadily increasing population doesn't work with stagnant or decreasing population.
At some point, a declining city needs to de-annex some of its former territory and prune its own deadwood. And it needs to fire its municipal employees that are not absolutely essential to keeping the city infrastructure running. Some shut down their city police and fire departments, reverting to sheriff's deputies and volunteer firefighters, who may even operate out of the same buildings. But the problem is the politics. Admitting the city is insolvent and promising to cut some services to save the rest doesn't get you re-elected when your opponent simply denies the problem exists and lies about the city's condition to make people feel better about still living in it.
There is nothing more challenging than firing incompetent city employees. And if they can lodge a discrimination claim against you (regardless of whether it has ANY merit) then just forget about it. Promote them up and out. What a cesspool.
Pardon the negative knee-jerk reaction, but I have seen land value taxes used abusively and in the most coercive manner you can imagine. It still makes my blood boil.
Back when I lived in Minnesota, the metro area interests were rezoning farm land as residential, and then taxing it at residential property rates, even though it was still used for corn fields and pasture. This was utterly destroying family farms.
Now before you accuse me of NIMBY-ism leading to housing shortages.... this was to create new ex-urban housing areas with 2.5 to 5 acre minimum lot laws. There was no shortage of places to build houses. Houses for sale sat on the market for months. This was driven by politicians and developers in cahoots to shove aside people that were in their way, and coerce them to disgorge their property and give up their lively-hood through unjustified perversion of the tax code.
Using the tax code to rob people of their property rights is not the answer. If you want to live in a kleptocracy, there are several you can move to. Maybe you will be one of the lucky ones and the state won't rob you.
To expand on this point, why would there be any institutional will to take more than a token effort to do any of those things? It's not like they risk getting voted out by someone who isn't on the same side and will leave the root system of the party's power to control government mostly intact (doing the opposite would anger enough people to not be in the self interest of anyone who gets elected).
Even if you keep voting in different politicians who actually want to do anything you're never actually getting a major refresh until you get someone from a different party who aggressively appoints a different set of cronies.
The thing which is aging is more likely the base of city employees and retirees who were promised defined benefit pensions which were underreserved for and routinely looted, over a period of decades.
Erie, for example, has an unfunded liability of about $90 million against a total annual budget of ~$115 million. (As is typical, the lion's share is police/firefighters.)
Once the city stops expanding, you now have no tax base to pay for all the existing roads needing replacement. All those replacement bills come due: the "aging infrastructure" needs more maintenance.
The annual required contribution is a mere $4.3 million
Their pension is 99% funded. I don't know why you'd bring it up, since it is unrelated to the article.
Fixing pensions won't change the fact that neglectful landlords get rewarded under the current taxation scheme.
Why bring it up? Because cities are special purpose vehicles to fund police/firefighter pensions which have a side hustle in providing civic infrastructure. That's quite relevant to the question of why costs are increasing (because politically powerful people got placated), whether investments in infrastructure will reduce costs (strictly impossible), and whether property developers are to blame for underfunded infrastructure (they do not receive checks from the city every month).
The article mentionedthe county of Erie. And the quote wasn't about any city in particular, just about generic "many older cities".
The city of Erie didn't come up in the article.
"Joshua Vincent’s piece on land taxation in Pennsylvania examines relative tax rates in Erie County, Pennsylvania, finding that property owners in the city of Erie proper pay close to double the taxes that those in many of Erie's suburbs pay."
Let me ask: How were those pension banks supposed to be funded?
The reason I ask is because my state has a defined pension plan for many public workers. The benefits are defined irrespective to how the market performs. We're also one of the highest income tax states out there. Yet the pension is underfunded. No one's been "looting" it. No one takes money out of it for some other purpose. The tax rate simply isn't enough to fund it. And we have a high tax rate.
Whoever designed this for our state did so with the assumption that market returns would be enough to fund it. It never was a plan of simply collecting tax money. They were wrong. The market returns were not enough.
Current retirees are getting their pensions. We just won't have enough for the next batch at current funding rates.
It's gone to court, and the courts have ruled that there are no loopholes: People will get their pensions, no matter what. So now we're dealing with the "no matter what". We have one of the worst high school graduation rates in the country, and the quality of education overall is rated fairly low. Yet, we can't solve that problem with money. Because for the next decade or two, pretty much all increases in education funding are going to fund the pensions. A number of cities are growing, and the mayors are very clear about the problems: They cannot afford more police officers and other similar employees to keep pace with the growing cities - because all the extra revenue they are collecting in taxes is going to fund the retirement funds.
The only solution the courts will allow is to change retirement plans for those just entering the workforce. But we will have to deal with this problem for a few decades where we must increase all kinds of taxes to pay for pensions, and allow the rest of the infrastructure to decay.
There's no cap on the defined benefits for high income folks, BTW. University football coaches, and retired presidents, get a lot of money (at least one of them gets over $70K/month). Of course, these are outliers. The median is under $40K/year.
Defined benefits is a bad idea. They need to switch to defined contributions from employers, and let the investments dictate their pay (and probably give employees more choices for the investments).
The best time to plant a tree was twenty years ago. The second best time is now.
We're still not doing it. Too much public opposition.
Only if it wants to collapse confidence in the currency; a major reason we have an independent central bank is to divorce monetary from fiscal policy for exactly that reason.
Also, while the federal government can do that once if it is willing to destroy faith in the currency forever, that doesn't really have any material impact on state and local government options since they can't direct the federal government to do it.
The issues are threefold:
1) Printing money reallocates wealth to government-chosen winners instead of consumer-chosen winners. This will destroy some wealth. Although, as long as it does not destroy most of the wealth in the country the currency will likely hold. This issue is made complex because the pensioners were promised wealth way back when, but now the question becomes why are today's taxpayers paying rather than the people who made those promises.
2) We don't know who's wealth is being destroyed (although the numbers suggest it is the Middle Class, imo).
3) The incentive structures created by bailing people out are atrocious. There is no way anyone will make hard decisions and change if they are bailed out. The banks did not meaningfully reform in '08. Cities will not meaningfully reform pensions if they are bailed out way. The rot will accrete as resources continue to be directed to people and institutions who have demonstrated that they do not know how to manage them.
It has been doing so, but allowing new dollars to flow into the system has been a policy to avoid deflation that would have occurred without the policy (that is, to reduce the value of the currency in a controlled way), not a monetization of government obligations.
You collapse confidence in the currency not by allowing new dollars to flow into the system in general, but by violating the confidence-building implicit commitment inherent in having an independent central bank, that is, the commitment that monetary policy will not be driven by fiscal concerns.
Currency collapse is extreme inflation; and that goes to the central point - there are a very wide range of numbers between 0% inflation and hyperinflation (20+% numbers).
Government monatisation isn't that much different from any other tax, except for the rather critical fact that nobody knows who is paying it. That makes it the least intellectually honest type of revenue raising, and the most likely to spiral out of control. Bringing it in is a pretty telling indicator that a country is unable to govern itself. It is a terrible idea. But it is unlikely to cause a currency collapse if they print and bail out the pensions. It'll just destroy some wealth.
What numbers are you referring to, exactly?
The Middle Class holds the majority of their wealth in their housing. If they're public sector or over a certain age they have a pension and that's all. You're advocating that we take no action to prevent the collapse of the latter.
>The incentive structures created by bailing people out are atrocious.
We aren't talking about bailing people out, we are talking about bailing pensions out.
>The banks did not meaningfully reform in '08. Cities will not meaningfully reform pensions if they are bailed out way.
After the bailout, the banks swallowed new regulatory burdens, new capitalization requirements, effective caps on their size and interdependence. The Trump administration is unwinding these, not the banks.
Your bet is that the economy will fare better if we let the pensions collapse. My bet is that because the velocity of money at the bottom (where people are dependent on their pensions) is so much higher then that at the top, that the collapse of the pension system will cascade negative effects into the rest of the economy that outweigh the cost of bailing them out.
I am? When did I do that? It is none of my business what happens. I'm not advocating anything to do with pensions.
I'm just pointing out that printing money is a tax, not an immediate death sentence to the currency.
> After the bailout, the banks swallowed new regulatory burdens, new capitalization requirements, effective caps on their size and interdependence.
So we've got a class of people who were trusted with vast amounts of power, and they mucked it up and destroyed a bunch of wealth.
The solution is to keep those people in the hot seat, and put in a couple of new rules?
That isn't a sensible response. When people muck up at that magnitude, they should go broke and be ejected from positions of financial power. Let someone else step up and try being in charge. Cushion the blow on households, sure, but the institutions should not be propped up. Change the rules too if that makes sense, but the important thing is to try out new people.
Absolutely not. I believe that executives at some of these institutions should have been held criminally liable for fraud. I also believe that people with the least amount of power shouldn't be the ones to take a haircut.
You're focused on the moral hazard of bailing out the pension system, but what about the moral hazard of promising a stable retirement income to working class people, signing a contract to that effect, and just having it disappear.
What does that say about the social contract between businesses and their employees, that a corporation or government be able to make a promise and not keep it?
Who faces the consequences then?
The problems are (a) he might just get into debt again, for the same reasons he did the first time; and (b) his brothers and sisters might be upset I gave him $$$ for fucking up, or even decide it's clever to emulate him.
In other words, by paying off something I can afford, I would fear triggering a chain reaction leading to something I can't afford.
What you describe in your family dynamic applies so minimally as to be a strawman representation of the far more complex systems at play governing the dynamic between the federal and state economies.
And pensions are just one way a municipality can take on debt. Even if you force them to lock up savings ready for their employees' retirement, they can still load up on debts with municipal bonds, signing long-term contracts, delaying payments to suppliers, and suchlike.
Have there been any examples where a federal bail-out has been accompanied by legal mandates, and it's been successful?
And even if federal pension fund bail-outs bring with them strict rules that prevent them recurring in the same city, unless you can impose such rules on other cities without giving them bail-out money, you've still got the issue that paying off City A's unmanageable pension deficit will encourage City B, which is struggling with its pension deficit, to make it truly unmanageable to get a bail-out.
Having the ability to mint fiat money doesn't mean you can pay for whatever you want. Costs adjust to the amount of money there is.
In the limit case, printing a very large amount of money is the same thing as imposing a 100% wealth tax. It will get you all the purchasing power there is to be gotten... but not more than that. (It will also pretty sharply reduce the absolute amount of purchasing power that "all the purchasing power there is" represents.)
It actually does when talking about pre-existing obligations denominated in the currency. It doesn't when talking about most other things, but existing pension obligations are pre-existing dollar-denominated obligations.
Now, the feds monetizing all the underfunded state and local pensions would effectively devalue the dollar, so those pensioners (and everyone else on a fixed dollar-denominated income) would be getting far less than they expect for it, and taxing extra money out of the system to counteract the inflationary effect negates the whole idea of monetizing the obligation in the first place—you might as well just leave monetary policy alone and tax money out of the system to pay for the pensions.
> It actually does when talking about pre-existing obligations denominated in the currency.
It still doesn't. It means you can default while calling the default "inflation". Doing so wipes out all other currency holders in addition to you, but it doesn't mean you met your obligations.
(This is basically the same thing as you're saying, but let's be clear about what it means.)
That's another potential solution. My point was that there are potentially many solutions that do not involve breaking our promises to working people.
It is possible to actually pay workers what they've been promised and not cause an economic collapse. The issue is gathering the political will to do so.
So under this scheme inflation is perhaps not inevitable, but it is almost certain given the dysfunctional mess that Congress is.
As mentioned in other replies to this thread, there are many potential solutions for the so-called crisis that don't involve reneging on the promises we've made to workers.
Second: Taxing the rich is extremely popular among the people, but not so much within Congress. This may be because the rich are Congress's constituents in a way that the rest of us theoretically are, but in practice aren't.
Third: For this to work, Congress needs to raise and lower taxes, not based on the popularity of taxes, but on the rate of inflation. Do you really trust Congress to make the right decisions at the right time? I don't. I trust them to make the popular decision, not the right one. ("Popular" perhaps more with the rich, but that's not the point. The point is, they're politicians, not economists. They're listening to what's popular, not to the economic data. They're going to mess this up. The Fed is politically independent for a reason.)
That’s the rub here. These liabilities are hanging around the necks of governments that can’t pull a monetary supply lever.
See this link for a survey of California issues with pensions. The source is the league of CA cities, so there is some bias but the results are still meaningful and eye opening regarding future mandatory spending commitments.
This would make a potential future crisis an actual current one.
Related article on LVT:
"But if LVTs are so great, why are they so rare?"
LVTs would impose concentrated costs on today’s landowners, who face a new tax bill and a reduced sale price. The benefit, by contrast, is spread equally over today’s population and future generations. This problem is unlikely to be overcome. Economists will continue to advocate LVTs, and politicians will continue to ignore them.
It does precisely what this article says, disincentives improvements, because "the government" is just going to take more of your money.
Seems illegal to boot (although I imagine there's plenty of precedent).
Taxing the land at least has some logic to it. "This land is serviced by this government, you pay for those services".
As well having a high land tax means you're going to build high revenue generating structures to meet your burden.
In the downtown your land tax would be higher because of demand of lots and higher land value, and in the suburbs it would be higher because of higher per-lot costs to the city.
Aren't the infrastructure and service needs (fire department for example) different for no building vs. a one story building vs. a forty story building?
As well, the taxes on sales in the increased number of stores / sales of leases / income tax revenue from the increased number of residents should cover the increase in service costs.
If they don't, you're not running an efficient government. (Ha. Efficient government).
This is why land-value taxes are unpopular: small landowners (e.g. Mom & Dad) want to be able to hold onto their small single-family homes instead of being forced to sell to a developer who would build a multi-family dwelling.
Cf. Prop 13 in California.
You wouldn't buy the property unless you had plans to develop it into something. Unless you're the kind of fool who buys 128gb RAM and only uses 4gb of it.
The price of an item should reflect it's use and probable ROI.
Please keep it civil. Hacker News is not the place for put downs, two of which you've included in your short response.
Suburban infrastructure, while spread further apart than city infrastructure, is usually far simpler to build and simpler to maintain and simpler to replace.
Costs go up a little bit in raw resources (longer wires, longer pipes, etc). But costs drop dramatically in amount of labour, length of time, installation costs, and so on. So usually, it's net-cheaper overall.
And you’re right, in those places the infrastructure cost per-capita is much worse and the problems are more acute.
What do you mean by this - population growth? Younger generations coming of age and such.
A house sits and does nothing. It doesn’t ‘consume’ anything and if it does consume or it’s residents consume, that’s taxed. We should have consumption tax..not property taxes for one’s primary residence.
We have road tax, gas tax, sales tax, income tax ..we pay for utilities, essential services, schools. But why should we pay taxes for living under a roof and getting married and giving birth and I guess when we die. That’s being taxed for existing.
Afterall, possession of a limited resource shouldn’t create a disadvantage to the owner of said possession. That makes no logical sense wrt property and ownership rights.
There is nothing natural about land ownership. The government creates the artificial construct of land as property to avoid the tragedy of the commons, where no one has an incentive to invest in making land productive--for example, by building a home, factory, or farm. A land tax prevents a land owner from squandering the privileges of land ownership.
Disadvantage from what baseline? Possession of a limited resource always creates an advantage to start with. If this is not compensated for with a tax, then aren't people going to compete away the value that would have been taxed? In which case it will be lost to society.
There is a tax at source. There is a tax at transfer/inheritance.
If it’s put to use, there is a tax at consumption. The house always wins. The govt always collects tax.
I disagree with the notion that redistribution should be coercion or punitive. A land tax for undeveloped land is punitive. Property and ownership is constitutionally protected. People shouldn’t be punished for being productive and wealthy.
Here is a thought experiment:
No one is taxed again and again every year after they buy ..say(and this is hypothetical)..a pace maker that is made with a very rare and precious metal that is a limited resource.
Of course, once the metal is depleted then others can’t avail it to make new pace makers that would help others live. Does it mean that the original recipients of a life saving device must be taxed every year as their particular illness start affecting new patients.
Think of that chronic illness as lack of access to property. And the pacemaker as the home. And the precious metal used to make the pace maker as the limited resource or commodity that is land.
Early adopters have an advantage. There is nothing morally or ethically wrong with it.
What is truly wrong is the punitive financial burden brought about by the mere possession of said asset. It’s incredibly perverse and unfair.
It can be argued that even a nominal property tax is unfair unless it is ploughed back as essential services. Using it for public education is for the greater good and is a mark of a egalitarian society. To use it to funnel money into unfunded pension liabilities of public sector employees under the guidance of unions is unacceptable. To claim it as a right with entitlement is borderline thuggery.
Given the inheritance of land, I think quite a lot of people would argue that there is something unfair about having an advantageous position simply because of your ancestors.
Pensions are deferred pay. It is wage theft - thuggery - to promise to pay people X now and Y later then renege on the Y later.
It seems like you very frequently hear the opposite opinion, that it is grievously unfair to not have an advantageous position that you should have inherited because your ancestors' land was taken away.
So I don't think that there is any consensus.
I can't parse all the double negatives in this.
I suspect that once we start designer babies, they would become property too.
Pensions don’t work anymore. It’s an outdated idea. Just like minimum wage, it’s forced penury for the promise of future wealth. This has only enabled unions and the like to exploit everyone including workers.
The children, and indeed everyone else, would probably disagree with you.
> Pensions don’t work anymore. It’s an outdated idea.
So, what of the period from the end of the useful working life until death? Penury?
At the end of the day, it’s speculation. Instead of spitting on the face of millennials and tech and Silicon Valley, they ought to look at unions and the burden of unfunded pension liabilities.
For most public sector employees, the last salary you draw is your pension for life. Law enforcement and fire fighters retire at 50 and are free to work after retirement. Until a few years ago, unclaimed leave could be cashed in..a caltrans driver took home 400+k from leave accumulated over 35 years. Others take the last couple of years off but remain unemployed getting an average of 4-5% hike annually which becomes part of their pension. This isn’t deferred pay. It’s pension spiking. It comes from unfunded liabilities. Which would put every Californian in debt for years to come and will probably never go away until pension schemes are over hauled.
I am thinking UBI of some sort. I would imagine a good way to test UBI would be for those in retirement. By abolishing pension schemes. No pension, higher pay during the working years. It’s fairer to all.
No one is taxed again and again every
year after they buy ..say(and this is
hypothetical)..a pace maker
People should not have to pay tax on their primary residence. I'm fine with taxes on every subsequent property and taxes on rental units on the same property but you should not have to pay a tax for owning your own residence.
My neighbours don't feel the same way, so we have mandatory trash pickup, a.k.a. a tax.
Wealth must be encouraged to share using incentives and not coercion. There is still value in freedom to make choices about property. Freedom is the corner stone of a free society. Individual freedom.
Don't get me wrong, I'm in agreement that this is a bad use of limited space. But the cause of this bad use is "mandated by law", not "accidentally incentivized by a policy". Tweaking the policy changes nothing if the requirement remains
The city and county would prohibit them from building additions or in law units or additional rentable units unless they subscribe to a limit. It’s been suggested that it should be no more than 40% of original sq footage.(in one city’s instance)
Meanwhile, new developments are in 3000 sq ft lots and have 2400-2600 sq ft built area leading to property prices from 1 million to 2 million dollars.
This leads to more new housing at high value and hence high taxes. By restricting additions for growing families or multi generational units or multiple units that can be rented, people would have to purchase from new developments.
More taxes for the state(California in this case) and developers benefit. But the high density doesn’t make infrastructure better nor does it address issues like over crowded schools(and over worked teachers)...less open space and traffic grid locks and thinned essential services.
This is my observation about high density developments. I am fond of the notion that embraces the philosophy of the Dunbar Number. Have fixed density that is comfortable..perhaps multiple fixed densities and provide infrastructure accordingly. Once the density : infrastructure ratio has been satisfied, move on and develop adjacent by creating an chain link to the previous planned development.
new developments are in 3000 sq ft lots and have 2400-2600 sq ft built area
Likewise, that initial 20% by area (2000 of 10,000sqft) structure dimension ratio sounds made up.
Re newer developments, here is an example: https://www.lennar.com/new-homes/california/san-francisco-ba... : plan 5, icona. Three stories, 2300 sq ft built area approximately. 1.2ish million.
On a related note, I browsed that random google link and clicked on ‘home automation’..basically it’s an Amazon home. Alexa would run your household. I am not sure if that’s a good thing or a bad thing.
All Bay Area cities have to follow mandatory orders for building quotas from a Bay Area organization called ABAG
First hand accounts re older properties
How about one example of any parcel with a residence footprint taking 80% of the parcel area?
As or that Lennar development, you are totally ignoring common area (exclusive and nonexclusive use).
In general, it drives high density and quality development. I might speculate that this will increase demand for housing, which would push up land value.
Also makes me wonder what the maintenance costs of rail are. I don't know much about it but light rail tracks look like they would probably last a really long time without being replaced where as it seems roads hardly last a few years before needing to be resurfaced.
In Italy Berlusconi abolished this tax I think but it works in other EU countries.
It ain't such a bad way of taxation. At the right rate it stimulates the economy - instead of being
frozen in real estate excess capital (peoples savings) moves into more productive parts of economy.
Sorry link is in Polish.
Is that the Sq meters of the ground floor, or sq meters when you add up the space of all the floors?
If the former, that sounds like a land value tax—-something that lots of people have suggested would improve construction incentives
 Provided you dedicate at least one whole room for commercial activity. If you don't then apparently there's no additional taxation. I am not qualified to give tax-related advice though, so don't quote me on that.
For property value, you at least have an active market to reffer to. Since most land is sold witg property on it, there is much less of a market to indicate the value of plain land.
Further reading: http://kaalvtn.blogspot.com/p/valuations-and-potential-lvt-r...
Reconstruction costs are something that I think are frequently estimated for building insurance purposes.