walkitout (walkitout) wrote,
walkitout
walkitout

Fogelson, _Rise and Fall_: "taxpayers", depreciating the fully depreciated

_Rise and Fall of Downtown_, location 3100 or so, Fogelson describes building owners in downtowns around the country during the 1930s tearing down what I would call midrises (9 stories, give or take, but sometimes up to 20, which I would call a high-rise) and replacing them with parking lots or low-rise (1-2 level) parking garages. Vacancy rates for office space were running 30% or more and the late 1920s bust meant there was a ton of new overbuilt inventory competing with older buildings from the turn of the century or before. "institutional investors had "blacked out" (or, as we now say, redlined) chunks of the central business district, refusing to make loans there because of what Business Week called "progressively declining values"." Tear down the building and the tax bill is reduced. Rent the space out for parking and make enough to pay the land tax and thus hang onto the property in hopes of eventually rebuilding. I'm pretty sure I know of one garage and a couple of lots in Belltown where "eventually" didn't happen until after I was an adult (and one of those garages at least is still a garage).

Here's a weird bit from a few screens further on (3200 ish): "What Los Angeles city planner Gordon Whitnall called "the spectacular shrinkage of values in the commercial centers of American cities" would probably have been even worse were it not for a provision of the U.S. tax code that permitted new owners of old buildings, even buildings that were fully depreciated, to depreciate them anew on the basis of their purchase price -- a provision that generated tax-free income and thus increased property values."

Words fail.
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