Question 1

All of the following statements are true in describing the determination of just compensation EXCEPT:

Accepted Answer

The statement "The value of the property is determined solely by its current use" is false because the value is based on the property's highest and best use at the time of the taking, not solely on its current use.

Question 2

It was not until the late 1960's that land use controls moved to the forefront of public interest, as the belief that the environment was an endless and costless resource was replaced with the notion that the world was a closed system with limited space, air, water, and other resources. Environmentalists coined which of the following terms to refer to this new point of view?

Accepted Answer

"Spaceship earth" was coined by environmentalist R. Buckminster Fuller to describe the idea that the planet is a closed system with limited resources, similar to a spaceship where everything must be reused and sustained to ensure long-term survival. This concept became influential in the late 1960s and helped to shift public interest towards land use controls and environmental protection.

Question 3

When a zoning ordinance is revised, some existing land uses then fall outside the new zoning classification. These land uses are referred to as:

Accepted Answer

Nonconforming uses are existing land uses that were legal before the zoning ordinance was revised but do not conform to the new requirements. They are typically grandfathered in and allowed to continue, but they may not be able to expand or change without seeking special permission or conforming to the new zoning regulations. Special uses refer to land uses that are allowed under certain conditions or with special approval, while conforming uses are those that meet the new zoning requirements. Exclusionary uses are not a common term in zoning and land use terminology.

Question 4

While most real property in the United States is privately owned, government regulations limit private property use and therefore play an important role in the determination of property value. Proponents of government intervention argue that regulation is needed to address the unintended and unaccounted for consequences of one land user upon others, more commonly referred to as:

Accepted Answer

The term "externalities" refers to the unintended and unaccounted for consequences of one land user upon others and is the most appropriate choice in this context. Incomplete information relates to situations where market participants have inadequate or asymmetric information about a property, which is not relevant to the issue presented. Locational monopoly refers to situations where the location of a property provides a competitive advantage to an individual or firm and is also not relevant. Urban sprawl could be considered an unintended consequence of private property use, but it is not directly related to government regulation. Therefore, C is the best choice.

Question 5

A traditional zoning ordinance includes all of the following EXCEPT:

Accepted Answer

Traditional zoning ordinances typically focus on segregating land uses into specific geographic districts and do not usually include performance standards, which are more characteristic of innovative or performance-based zoning approaches. These standards focus on the outcomes or impacts of development rather than prescribing specific types of land uses.

Question 6

A developer plans to place a subdivision slightly outside the city limits in an area that is rapidly developing. However, the city claims to have the right to control urban development even in the proposed area. The right the city is attempting to invoke is referred to as:

Accepted Answer

The right the city is attempting to invoke is extraterritorial jurisdiction, which is the extension of a city's authority beyond its boundaries to regulate and control development in the surrounding areas. This is often used as a tool for cities to manage growth and ensure that development outside of their boundaries is consistent with their own plans and policies.

Question 7

A contemporary planning movement that explicitly advocates a traditional grid pattern of development designed to give pedestrian life priority over motor vehicles (e.g., including narrowed streets with houses close to the street and garage access through side alleys) is commonly referred to as:

Accepted Answer

The contemporary planning movement described in the question is known as New Urbanism. New Urbanism promotes walkability, mixed-use development, and traditional neighborhood design, including the use of grids, narrow streets, and garage access through alleys to prioritize pedestrian movement over vehicle traffic.

Question 8

The right of government to acquire private property, without the owner's consent, for public use in exchange for just compensation is referred to as:

Accepted Answer

Eminent domain is the legal concept that allows the government to take private property for public use, provided that the owner is paid just compensation. Inverse condemnation refers to a situation where the government takes private property without going through the proper legal channels for eminent domain. Regulatory taking refers to a government regulation that deprives an owner of all economically beneficial use of their property. Dedication refers to the process by which a private owner voluntarily transfers land to the government for public use.

Question 9

Growth management laws at the state level require local jurisdictions to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have been put in place first. This requirement is referred to as the:

Accepted Answer

The requirement described in the question is known as the concurrency requirement, which is a key component of growth management laws at the state level. The concurrency requirement ensures that local jurisdictions do not allow development to occur unless the necessary public facilities and services, such as schools, police and fire protection, transportation systems, and social services, are in place to support it. This helps ensure that new development does not negatively impact the surrounding community or put an undue burden on public services.

Question 10

Real estate taxes represent the largest single source of revenue for a large portion of local governments. Most property taxes are applied in relation to the value of the property, or in other words, they are:

Accepted Answer

Ad valorem taxes are taxes that are imposed based on the value of the property. This means that the amount of the tax will vary depending on the value of the property. Ad valorem taxes are the most common type of property tax, and they represent the largest source of revenue for many local governments. Effective tax rates, on the other hand, are a measure of the total tax burden relative to income, while tax-exempt means that the property is not subject to taxation. Regressive taxes are those that impose a greater burden on lower-income individuals.

Question 11

Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control)

Accepted Answer

Building codes are the earliest method of police power to regulate land use, historically developed to address safety concerns related to construction practices and materials.

Question 12

State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the "Superfund" to finance emergency responses and cleanups of abandoned and unregulated waste dumps?

Accepted Answer

The Comprehensive Environmental Response Compensation and Liability Act (CERCLA) established the "Superfund" in 1980 to finance emergency response and cleanup of abandoned and unregulated hazardous waste sites. The act also created a liability system for those responsible for the contamination to pay for the cleanup and response actions.

Question 13

After a structure is built, it is impractical for even a building expert to fully assess the quality of the construction and the safety hazards it may harbor. This is an example of which of the following problems that plagues private real estate markets?

Accepted Answer

The problem described is an example of incomplete information, as even an expert cannot fully assess the quality and safety of the construction. Incomplete information refers to situations where either buyers or sellers do not have all the information necessary to make optimal decisions, leading to market inefficiencies.

Question 14

When land use controls impose exceptional hardship and loss of value, a relief mechanism must be provided. This relief is referred to as a:

Accepted Answer

A variance is a type of relief mechanism that allows property owners to exempt from certain land use controls if they can show that these controls result in exceptional hardship or loss of value. The zoning board of appeals or board of adjustment is typically responsible for granting variances. Building codes, zoning ordinances, and comprehensive plans are all land use controls rather than relief mechanisms.

Question 15

Development taking place in rural areas well beyond the urban fringe is commonly referred to as:

Accepted Answer

Urban sprawl refers to the spread of urban development into rural areas, often characterized by low-density, automobile-dependent development beyond the boundaries of more densely populated cities or towns.

Question 16

Negative externalities can diminish a property's value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate "internalizing" these externalities by implementing:

Accepted Answer

Impact fees are charges imposed on developers to offset the negative externalities their development may have on the community, such as increased traffic or strain on public services. By internalizing these costs, the property's true value is reflected and the community is compensated for the negative impacts. Performance standards, growth moratoriums, and planned unit developments can also help to mitigate negative externalities, but impact fees directly address the issue of property devaluation.

Question 17

In order for the board of adjustment to approve a variance, all of the following conditions must be met EXCEPT:

Accepted Answer

The condition being common to other parcels of land in the vicinity is not a requirement for a variance. Variances are typically granted when the condition is unique to the lot, not when it is common to other parcels.

Question 18

Externalities can play an important role in determining a property's price, either by adding value through positive externalities or by diminishing value through negative externalities. Which of the following is most likely to be considered a negative externality?

Accepted Answer

Public assistance facilities such as homeless shelters are often considered a negative externality as they can lead to increased crime rates and decreased property values in the surrounding area.

Question 19

One of the main criticisms of property taxes is that the property tax of lower income households is higher than that of higher income households, as a percentage of their respective incomes. In other words, taxes are criticized for being:

Accepted Answer

Property taxes are considered regressive because lower income households have a greater proportion of their income going towards property taxes, compared to higher income households. This can result in an unfair burden on those with lower incomes, as they may struggle to afford the taxes on their property.

Question 20

Special assessments are levied to pay for specific improvements that benefit a particular group of properties. All of the following characteristics of special assessments are true EXCEPT:

Accepted Answer

Special assessments are not considered ad valorem taxes, which are based on the assessed value of the property. Special assessments are based on the actual cost of the specific improvement being made and are applied as pro rata charges to the properties that directly benefit from the improvement. They are commonly used to finance streets, stormwater systems, sidewalks, and other area improvements.

Quiz 4: Government Controls and Real Estate Markets