First, thanks for bringing this up and now making it a part of a broader dialogue. I must say that the quote from ‘Market Urbanism” above is completely missing the point:

“This either means they’ll build smaller in anticipation of the glut of new development, or vacancy rates will be much higher. ”

In truth, the Market Urbanism quote actually confirms Hudnuts point – he says, “…they will build…” Who cares if they are building smaller buildings than they might otherwise at some point decades down the road. The problem in downtown Oklahoma City – any many other cities like it – is not that we don’t have enough big buildings, and certainly not that we have too many small buildings, the problem is that we don’t have enough buildings of any size…BUT we have plenty of vacant land and too many surface parking lots – both problems that Hudnut’s proposal would certainly address.

As for the immediate changes in the market, a similar scenario would be true anytime regulations are changed. If we have an opportunity to improve the tax code so that it makes the real estate market more efficient and improves our cities, we should not allow a fear of initial market correction deter us from doing so. Further, this can be addressed by staging in the tax code change to create a more gradual shift in the market. We don’t have to remain prisoners to the policies and tax-codes of yesterday.

The best real estate economist in the world know this works, Henry George knew this worked, but wealthy property speculators are – and have always been – more difficult to convince!

For more info on Land Value Taxation (LVT), check out: http://www.urbantools.org/