Hacker News Reader

Comment by JumpCrisscross | Hacker News Reader

> These sorts of land use restrictions should be illegal

An easier solution is mandatory sunsets after a period of time. Because the flip side of making them illegal is you'll have a lot more land with conservation easements being exploited for resources.

View on HN

This kind of reminds me of when airspace was separated from Land property rights. There doesn't necessarily need to be any underlying logic or consistency, so a very tailored legal interpretation could be formed in theory.

That said, I think I'm much more practical solution is to focus on the buyer's rights and non-competitive behavior then limiting sellers rights. It makes intuitive sense that people would be able to option or sell indefinite use rights if they own the thing itself. It is less intuitive that individuals have a right to aggregate such options for Monopoly.

Now that I think about it, it seems there could be some comparison to the corner crossing cases that are being litigated too

I think a really natural solution would be to tax these sort of land restrictions for as long as someone is actually willing to pay. Just assess the value with the restrictions vs without and then tax it at the standard property tax rate. If nobody cares enough to pay for the restriction then it is lifted.

are you OK with charging apartment renters property tax in addition to the landlord?

On a more serious note, I think tax is a terrible solution. Who is going to value all of these use rights, restrictions, and options on an ongoing basis. Why punish everyone with any kind of good faith contract to deal with an extremely niche issue, which may not even be a problem.

Seems like the current solution is best. If someone is bothered, they can complain and the AG investigates. If someone is engaging in anticompetitive action, they get fined. It amounts to the same thing without screwing everyone over.

There's a reasonably simple change that would allow application of Harberger's taxes.

1. Restrictions have to have a "controlling party": a dedicated party that controls the restrictions and can agree to lift it. Classical example would be HOA, but it can also be a seller if they want to sell property with additional restrictions.

2. The controlling party sets the price of a restriction

3. Restricted party can remove the restriction paying price set in 2 to controlling part.

4. The controlling party pays tax as percentage of price set in 2.

So you still have renters paying property taxes.

Renters are the controlling party. Landlords are the restricted party- they can not rent to other people or use the house themselves.

In a supply-restricted markets taxes and subsidies are ultimately paid by a supplier independent on who actually transfers the money to government.

Sure, but that doesn't preclude crappy government tax policy having an impact on markets.

Consumption and supply is not fixed and taxes aren't a free lunch.

It’s not that hard to carve out classes of restrictions that are illegal. Racial covenants were nullified this way in the past.

> conservation easements

I.e. easements that come from law rather than seller stipulation? Seems an easy distinction to make.

> I.e. easements that come from law rather than seller stipulation?

A lot of convservation land in America is put under non-governmental easement [1]. The owner puts a restriction on the deed prohibiting development. They typically require emininet domain powers to be removed.

[1] https://en.wikipedia.org/wiki/Conservation_easement

The government could probably choose to define the terms used to define retail activities in the covenant as meaningless.

Menard's does this in Michigan, and then tries to get the taxes on their replacement stores to be based on the restricted property. It's nuts.

We can probably define a legal conservation easement as one that prevents further development on a piece of land, as opposed to regulating the uses and types of development.

conservation easements derive from seller stipulations:

"Sure NGO XYZ, I'll sell this land to iff you accept a long-term restriction on it's use"

There are a few historical types of deed restrictions that have been judged illegal and unenforceable. A corporation placing a deed restriction on a parcel to prevent competition with itself sounds like an illegal class of restriction

JumpCrisscross, what do you think of the suggestion elsewhere in this thread[1] to tax the value of that restrictive covenant/easement?

Only saw that idea just now and it seems interesting enough to investigate further. I'm not a tax guy though so don't know if I'm missing something obvious.

[1]https://news.ycombinator.com/item?id=42046657

This has existed for 100s of years, historically.

https://en.wikipedia.org/wiki/Rule_against_perpetuities

That is indeed a downside, but the expectation there should be that the government should be restricting resource exploitation where that's undesirable.

> the expectation there should be that the government should be restricting resource exploitation where that's undesirable

That's a system that fails more catasrophically than private easements.

That's a bold statement. Would you mind providing an example or argument?

The restriction already sunsets. Read the article it says 2038

Wow great, the previous owner is telling you what to do for only 16 more years.

Don't you mean the contract you signed is telling you what to do for 16 more years?

Same thing since the previous owner is the counterparty for the land sale.

Sure, but it’s a thing that you agreed to when buying the parcel, as part of the overall deal. If you didn’t want that restriction, you may have bid more to get the seller to give that up or you could choose not to buy under those terms.

My point is that such contractual terms should not be enforceable given their anticompetitive impetus.

not all such terms are anticompetitive. In this case, the AG stepped in and took action because they were anticompetitive.

There is an inordinate amount of our present economy that is, broadly speaking, anticompetitive.

The government has been mostly disinterested in pursuing antitrust actions for about half a century now, requiring very explicit evidence of very specific forms of price fixing by very unpopular companies to take any action other than blocking the largest of mergers.

Recent political changes over the course of the 2020's have started to change that, and these changes represent significant news relative to the situation for the past couple generations.

We need to be careful here. Because we still want people to sell off potentially productive land. Lets say I buy two lots along a highway with growing traffic because I believe in the next 5-10 years it will be a good spot for a gas station/convenience store.

So now 5 years later the highway is developing and I build out my location. I decide I want to sell the other lot since I'm not going to build on it.

Now, I don't need to sell it. I could hold on to it, it's not that expensive to own. It would be a great spot for a fast food joint or what not. But I don't want to sell it to someone who immediately develops it as a gas station.

The public would benefit from developing the land - new services and more tax revenue. So it's in the public's interest for the owner to sell.

So you want to allow some amount of anti-competitive restrictions. I get not wanting permanent non-removable restriction.

Yes. The contract you signed that restricts this commercial property in order to protect the seller's monopoly. Which is a conspiracy in restraint of trade.

Reply on news.ycombinator.com