Question 1

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

A)  regressive 
B)  comprehensive 
C)  concurrent 
D)  extraterritorial

Question 2

Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, Millage Rate: 33.95 mills.

Accepted Answer

A)  $4,685.10 
B)  $4,753.00 
C)  $11, 882.50 
D)  $46,851.00

Question 3

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

A)  Nearby parks and recreation facilities 
B)  Quality neighborhood schools 
C)  Public assistance facilities such as homeless shelters. 
D)  Well-kept landscapes.

Question 4

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

A)  performance standards 
B)  impact fees 
C)  growth moratoriums 
D)  planned unit developments

Question 5

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

A)  They are considered ad valorem taxes. 
B)  They are applied as pro rata charges. 
C)  They are levied directly on the properties benefited. 
D)  They are commonly used to finance streets, storm water systems, sidewalks, and other area improvements.

Question 6

Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $537,500, Assessed value of property: 60 % of the market value, Exemptions: $2,500, School District Millage Rate: 29.25 mills, County and Township Millage Rate: 5.75 mills.

Accepted Answer

A)  $7,437.50 
B)  $11,200.00 
C)  $11,287.50 
D)  $188,125.00

Question 7

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

A)  Subdivision regulation 
B)  Zoning 
C)  Building Codes 
D)  Planned Unit Developments

Question 8

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

A)  economic and environmental impact requirement 
B)  concurrency requirement 
C)  affordable housing requirement 
D)  extraterritorial jurisdiction requirement

Question 9

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

Accepted Answer

A)  The owner must be unable to use the lot as zoned. 
B)  The condition is common to other parcels of land in the vicinity 
C)  The variance must not materially change the character of the neighborhood. 
D)  The condition is unique to the lot.

Question 10

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

Accepted Answer

A)  The value of the property is based on its highest and best use at the time. 
B)  The value of the property is determined solely by its current use. 
C)  The value is the amount that restores the property owner to a financial position equivalent to that existing before the property was taken. 
D)  The value is the market value of the property if completely taken, or the total value of all financial loss if partially taken.

Question 11

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

A)  Externalities 
B)  Incomplete information 
C)  Locational monopoly 
D)  Holdout

Question 12

Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, State Millage Rate: 0.25 mills, County Millage Rate: 13.70 mills.

Accepted Answer

A)  $34.50 
B)  $1,890.60 
C)  $1,925.10 
D)  $4,685.10

Question 13

Eminent domain is the right of government to acquire private land, without the owner's consent, for public use, with due process and just compensation. The legal procedure for exercising the right of eminent domain is referred to as:

Accepted Answer

A)  Growth restriction 
B)  Urban sprawl 
C)  Blighted development 
D)  Condemnation

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)  building code 
B)  zoning ordinance 
C)  comprehensive plan 
D)  variance

Question 15

Nearly half of states in the U.S. use the sale of tax lien certificates to manage defaulted property taxes. The certificates are auctioned to the public at:

Accepted Answer

A)  the face value of the property taxes due 
B)  the assessed value of the home 
C)  a discount from the face value of the property taxes due 
D)  a premium of the assessed value of the home

Question 16

Given the following information, compute the effective tax rate for the particular piece of property in percentage terms. Market value of property: $325,000, Assessed value of property: $250,000, Exemptions: $50,000, Taxes paid: $5,363.

Accepted Answer

A)  1.50% 
B)  2.35% 
C)  1.65% 
D)  2.68%

Question 17

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

A)  special uses 
B)  nonconforming uses 
C)  conforming uses 
D)  exclusionary uses

Question 18

Given the following information, compute the property tax rate for the community in percentage terms. Total budget expenditures: $108 million, Total non-property tax income: $50 million, Total assessed value of all properties: $2 billion, Total exemptions: $550 million.

Accepted Answer

A)  2.5% 
B)  4.0% 
C)  10.0% 
D)  12.0%

Question 19

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

Accepted Answer

A)  urban sprawl 
B)  holdout 
C)  urban service areas 
D)  homestead

Question 20

In the history of eminent domain, the Kelo v. New London, Connecticut decision of the U.S. Supreme Court in 2005 affirmed the possibility of a community being:

Accepted Answer

A)  Prohibited from using eminent domain. 
B)  Restricted to use of eminent domain only for actual government (public) land uses. 
C)  Able to use eminent domain to acquire property for private development if it serves public purpose and the current land use is blighted. 
D)  Able to use eminent domain to acquire property for private development if it serves public purpose even if the current land use is not blighted.

Exam 4: Government Controls and Real Estate Markets