Calculating the cost of land preservation

ON THE BAY

Property: A new study challenges the conventional wisdom on the economic impact of downzoning.

March 26, 2004|By Tom Horton | Tom Horton,SUN STAFF

YOU OWN a pretty piece of Maryland countryside on which the local zoning for many years has said you could develop one house for every 2 acres.

I come along, all green and civic-minded, wanting to change that to, say, 20-acre minimum lot sizes, one-tenth the homebuilding potential.

It's a process known as downzoning, and it's important for protecting open space and wildlife habitat, and shielding the Chesapeake Bay from polluted runoff.

It's about the public interest, our shared future, I say.

It's about my land, you say, my retirement, my kids' options if farming fizzles.

It's a tension that's occurring every day in fast-suburbanizing Maryland, the nation's fifth most densely populated state.

Farmers and other large landholders know for certain: Restricting their development potential devalues their property. Even many preservationists concede this could happen.

But what if it simply weren't true? What if even a tenfold downzoning had no negative economic effect?

There have been hints before that what seemed so intuitively correct might not hold up to real analysis.

In Baltimore County, the Valleys Planning Council, a community group, looked at 90,000 acres of rural lands from 1986 to 1996, and found no difference in property values between those downzoned to 50-acre lot sizes, and those zoned for 5-acre lots.

But Baltimore County was an anomaly, so the thinking went around the rest of Maryland. With its affluent horse country and booming metropolitan economy, it wasn't the real world.

Russ Brinsfield, an Eastern Shore farmer and director of the Maryland Center for Agro-Ecology, thought as much when his center commissioned perhaps the most rigorous study anywhere in the country of downzoning's impact on rural land values.

"I really thought we would find a loss of equity," Brinsfield says. So did the study's author and former farm girl, Sarah Taylor-Rogers, a past secretary of natural resources in Maryland.

What they learned should begin to change the fierce opposition property owners have shown to more protective zoning.

A shift is sorely needed. In the last half-century, development has taken nearly half of Maryland's farmland -- and about 2 million of the state's 6.2 million acres. A lot was cropland, but the bulk came out of forests, pasture, meadows and wetlands.

Despite Maryland's many programs to preserve open space through purchase and voluntary easements, without better zoning, farmland loss will remain unacceptably high, Brinsfield says.

The Agro-Ecology Center used the state government's comprehensive real estate database to analyze hundreds of land transactions in Maryland counties, from rural to suburban, over a 19-year period ending in 2001.

It compared what happened to rural land values in four "pairs" of adjoining counties -- one where lands had been downzoned, the other where they had not.

The pairs were Somerset-Dorchester, Charles-Calvert, Queen Anne's-Talbot and Queen Anne's-Kent. Zoning was two to five times as restrictive in the downzoned counties.

In all cases, "the result of downzoning was either higher land value ... or little to no appreciable effect on land value," the study concluded, adding: "Conventional wisdom that zoning has a uniformly negative effect on land prices is untrue."

The study holds lessons for county planners on what maintains property owners' equity -- downzoning alone is not an automatic answer, it concludes.

First, there needs to be a demand for land. That, combined with downzoning, in effect creates a scarcity, bolstering property values, Taylor-Rogers says. In Maryland, she adds, demand for land exists virtually everywhere.

Downzoning works better when it is part of a comprehensive planning and zoning process. Allowing downzoned landowners to sell "development rights" based on their old, less restrictive zoning is a technique Calvert County uses.

It's important for counties to "create a market" for those development rights -- steering growth into areas focused enough that developers will want to buy additional rights, the study says.

In Montgomery County, downzoned land didn't rise sharply in value until the county allowed intense development in other portions, creating a bigger market for development rights.

Most farmers, and the Maryland Farm Bureau, "remain skeptical" about downzoning, says Steve Weber, past president of the bureau and a board member of the Agro-Ecology Center.

"And they should be skeptical," says Weber. "Personally, I hope this study is true, because if so, it's important. But I'm right on the fence with whether [downzoning] is really fair."

Fair enough. One study, even this good, won't overnight repeal lifetimes of loathing what Weber calls "the Z word [zoning]."

But neither will it be fair if the state's agriculture community ignores this seminal effort by the nonpartisan center.

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