Quote:
Originally Posted by Handro
can't it create a scenario in which a landlord might feel more comfortable searching for a tenant at whatever rate they are asking rather than lower the price if they pay so much less in property taxes indefinitely?
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I highly doubt that.
When you've got expenses and mortgage payments to make, plus lets not forget that commercial lenders assess your financial portfolio yearly and at any time can demand immediate repayment of the loan (unlike standard residential mortgages where that is not the case) if they think you are unstable footing, it does not behoove property owners to keep a retail space vacant for a long period of time.
Lack of revenue never made anyone rich, even if it meant a tax break.
Don't get me wrong, sure some landlords may hold out for a while trying to get a higher paying tenant, but eventually if the market doesn't deliver then you will have to revise expectations and lower rents. The only entities that can keep commercial spaces vacant for long periods of time are deep-pocketed companies that own vast amounts of real estate and can weather the storm.
But for the rest of us, it's a losing proposition every month that a space is vacant and we're making no money. Raising property taxes in that situation only adds more injury to the situation.
This proposal to raise taxes in vacancy situations is dangerous for many reasons--it could, for example, encourage teardowns. In addition, if you raise taxes when a landlord is most vulnerable you may push them to bankruptcy, in which case you'll get no tax revenue whatsoever.
It's only fair to lessen the tax burden during periods of vacancy. I realize that there are cited examples of abuse, but that doesn't mean it's a failed policy. Every policy has its cases of abuses, but in this scenario for the vast majority of property owners it makes sense and is fair.