Meas. 37: Strangling the Golden Goose That Birthed It

While setting Jack Bog (and the record) straight on Portland's disdain for Measure 37 a couple days ago, I was reminded of the way in which the law resembles a snake eating its tail: we are certainly not far from a scenario where a landowner files an M37 claim based on the loss of value resulting from a neighbor's prior M37 claim. Over at HinesSight, Brian and Laurel Hines would seem to be prime candidates for such a "countersuit":

Nearby, a Measure 37 claim has been filed on a 215 acre parcel that currently is zoned EFU (exclusive farm use). As noted in “Measure 37 hits close to our home,” the owners want to put 80 homes on the land. They believe that the land is worth $18 million with AR zoning compared to $650,000 with EFU zoning.

So they either want Marion County to give them $17 million and change, or waive the land use laws that are preventing them from selling 80 lots. Now, $18 million divided by 80 is $225,000. That’s pretty steep for a two or three acre rural lot, but is fairly close to the market price—especially considering that many of the lots in this proposed development would have nice views.

This phenomenon has been brought up before, as I mentioned; people who used to live next to open space but will now be adjacent to a subdivision or resort community are themselves likely to suffer land value losses based on the changing character of the surrounding land.

But Hines takes a further step back and exposes the illogic of many M37 claims to begin with: it was the regulations themselves that created much of the value in the first place!

Oregon’s land use laws limit the supply of rural acreages zoned for housing, so this increases the price per acre. Thus the only reason this Measure 37 claimant may make as much money as he thinks he will is because the laws he wants waived have produced the land value that he wants to reap.

In other words, most Measure 37 claims are parasitic. They’re sucking up benefits produced by the very land use laws property rights advocates hate so much. And in the process they’re reducing the value of neighboring properties. People in our area thought they could trust that EFU acreages would remain farmland.

With Measure 37, surprise! You can wake up one day, hear the sound of fir trees being felled, and find that your rural home is about to be surrounded by a subdivision.

Lest you believe that this concept of shifting value based on regulations is simply the random musings of a blogger, Rogue Pundit fills us in on a Jackson County claim that has been approved. All good for the claimant, right? Not so fast--since waiving the particular zoning regulation for a single parcel means that the regulation essentially doesn't exist (and never did), that parcel is now subject to back taxes. Turns out some areas have decided that if the landowner wants the locality to let them pretend the regulation doesn't exist, the locality should ALSO pretend--and thus tax the land under the previous zoning classification, starting from the day the new classification (never) happened.

The landowner's lawyer in this case wants to argue that taxes shouldn't be assessed until the land is developed or sold, in essence claiming that the new "value" doesn't exist until actual improvements or sale records are realized. But he's caught in a Catch-22 on that one, since the basis of his client's M37 claim is formed by value that only exists hypothetically as well. I've argued that point many times with M37 supporters: how on earth can you claim a devaluation on land without concrete knowledge of what the "new" value is? Supporters invariably point to county assessments as their value crutch. But when those same assessments are used to rejudge the value of newly unrestricted property after a successful claim--i.e., you can put homes there now, so it's worth more--suddenly value becomes only an unfair hypothetical. Pffffft.

Finally, back in February at New Frames I ran across a good idea for making sure "costs" and "value" are fully considered in an area where no growth has previously existed: make the claimaints pay for infrastructure:

This is what I propose: Property owners and developers who want to build subdivisions and the like outside of urban growth boundaries, and therefore away from established infrastructure, should pay for 100% of the cost of roads to and from the developments, the upgrading of existing roads near the developments, sewers and/or septic tank impacts, public water lines that may be required due to the likelihood of low water tables in rural areas, impact to the local school district (a formula could be established that would calculate the cost each new house would have on nearby schools), a percentage of the future costs to upgrade the rural freeway interchanges that feed into these new developments (the cost could be calculated based on the number of homes in new developments that are dependent on particular freeway entrances and exits) and any other required services such as electrical lines.

Oregon taxpayers should not be responsible for paying a single penny of any development costs outside their cities' urban growth boundaries. If property rights activists believe that property owners can do whatever they want with their property or be compensated by the government for not being able to develop, then those owners should pay for the cost of their development in full, thank you very much.

As many of us have tried to explain in the past, landowners who want the state to treat a single parcel of land in a vacuum as if nothing borders it, will soon find that there's similarly no boundary protecting it from all the other laws (and landowners) out there.