[From the U.S. Government Printing Office, www.gpo.gov]
enm. e r 2015 S28 1977 legional Science Research Institute GPO Box 6776 Phila., Pa. 0 property of CBC Library SAVING THE GARDEN: THE PRESERVATION OF FARMLAND AND OTHER ENVIRONMENTALLY VALUABLE LAM APR 24 1978 by Robert E. Coughlin COASTAL ZONE INFORMATION CENTER David Berry Kenneth Bieri David Boyce Janet Kolhase Ernest Leonardo John E. Pickett U . S DEPARTMENT OF COMMERCE NOAA Thomas Plaut COASTAL SERVICES CENTER Benjamin H. Stevens 2234 SOUTH HOBSON AVENUE Ann L. Strong Daniel Vining CHARLESTON, SC 29405-2413 Kathleen Wallace A Preliminary Report to NSF(RANN) August 1977 This research was supported in part by Grant No. ENV76-05249 from NSF(RANN) to the Regional Science Research Institute. ZONE TPble of Contents I. Introduction ......................................... A. Perspective ...................................... B. General Framework for the Study ..................... 4 II. The Nature of the Problem ............................. 11 A. The Direct Effects of Urbanization ................ 12 1. The National Perspective ..................... 14 2. Regional Perspectives ........................ 33 3. Local Perspectives ........................... 43 4. Conclusions .................................. 50 B. Indirect Effects of Urbanization.... '*''* ..* 50 1. The Nature and Causes of Indirect Effects..... 52 2. Spatial Expression of Indirect Effects ........ 58 C. Conclusions ...................................... 73 III. Forces and Institutions Influencing Land Use .......... 77 A. The Land Market .................................. 78 1. Actors in the Land Market .................... 7q 2. The Demand for Land .......................... 84 3. The Availability of Land ..................... 85 4. Market Processes ............................. 87 5. The Price of Land ............................. 90 B. Attitudes of the Courts ...................... o ... 95 C. Popular Attitudes ........... o ..................... 98 D. Viability of Agriculture ......................... 100 1. Physical Constraints ......................... 103 2. Prices and Costs ............................. 105 3. Shifts in Infrastructure ..................... 105 4. Other Forces and Constraints ................. 110 IV. The Nature of Land Use Controls ...... ............... 112 A. Mechanics of Land.Use Controls ................... 112 1. Direct Controls ...... 114 a. Acquisition of Development Rights ........ 114 i. Direct Purchase of Development Rights ......................... ... 117 ii. Purchase of Fee and Subsequent Resale with Restrictions ........... 118 iii. Purchase of Fee and Subsequent Lease with Restrictions ............. 118 .iv. Exercise of the Right of Preemption ......................... 120, b. Regulatory Methods ....................... 120, i. Exclusive Farm or Rural'Use Zoning 121 ii. Tnverse Condemnation ......... 121 iii. Transfer of Development Rights ..... 122 iv. DevelopmentPermit Systems .......... 125 2. Indirect Controls ............................ 126 a. Tax Incentives ........................... 126 i. Differential Assessment for Property Tax .... 126 ..... .. ... .. . ii. Differential Valuation-for-Esta@e and Inheritance Taxation ........... 129 Tax Disincentives -*- 132 i. Capital Gains Tax on Land Sales .... 132 C. Protection from Urban Effects ............ 135 i. Agricultural Districting ........... 135 V. Experience With Land Use Controls .................... 137 A. Experience with Direct Controls 137 1. Experience with Acquisition' of Development Rights ......... .............................. 137 a. Direct Acquisition of Development Rights 137 i. The Wisconsin Scenic Easement Program ............................ 137 ii. Suffolk County (N.Y.) Farmland Preservation Program ............... o 145 iii. The New Jersey Farmland Preservation Program ................. o .......... 152 b. Purchase and Sale or Lease with Restrictions ............ o- ....... oo .... 162 i. Massachusetts Town Conservation Commissions' Programs of Purchase and Lease .......... 163 ii. Saskatchewan Land Bank Program ..... 167 C. Exercise of the Right of Preemption ...... 172 i. The French Experience .............. 172 2. Experience wit 'h Regulatory Methods ........... 182 a. Exclusive Farm Zoning .................... 182 i. 'A General Survey ................... 182 ii. The Oregon Land Use Act and Exclusive Agricultural Zoning ...... 198 b. Inverse Condemnation ................. o ... 210 i. The Massachusetts Wetland Restriction Program ................ 210 C. Transfer of Development Rights ........... . 217 d.. Development Permit Systems ....... ......... 219 i. California: Coastal Commissions 219 ii. Florida: Developments of Regional Impact ........................ 0 ...... 221 iii. Vermont's Environmental Control 'Act (Act 250) ...................... 223 B. Experience with Indirect.Controls ................ 233 1. Experience with Tax Incentives ............... 233 a., Differential Assessment for Property Taxation ................ ............ 233 i. Illinois' Differential: Assessment Program: The Chicago Area 235 ii. California's Land.Conservation Act 238 b. Experience with Differential Valuation for Federal Estate and State Inheritance Taxation .................................... 241 2. Experience with Tax Disincentives ....... o .... 243 a. Capital Gains Tax, ......................... 243 3. Experience with Agricultural Districting ..... 248 VI. Characteristics of Land Use Controls Affecting Their Enactment and Implementation .................. ...... 259 A. Introduction and Overview ................. ...... 259 B. Complexity ....................................... 267 1. Definition and Application of Basic Concepts 268 a. Environmentally Valuable Land and Prime Agricultural Land ...................... 269 b. Use Value ......................... o ...... 272 2. Establishment of New Institutions ............. 281 C. Magnitude and Distribution of Costs .............. 290 Do Uncertainty_o ..................................... 300 1. Familiarity ............... 306 2. Permanence-of the Control and Certainty of Outcome .................. o ......o ......... oo... 302 E. Conclusions ......o o ............. o.0 ....o ...... 308 Vilo Potential Effectiveness of Land Use Controls .... 311 A. Considerations Related to Effectiveness .. ........ 311 1. Extent to @Which the Control Prevents Unwanted Land Use Changes .............................. 311 2. Coverage of the Control ..... o ................ 315 Permanence of the Control .................... 318 a. Effects of other Public Plans., Policies, and Programs ..................... ... 318 b. Effect of the Control in Reducing the Landowner's Economic Need to Develop ..... 319 C. Susceptibility of the Legal Instrument to Change ................................. 320 B.. Conclusions ..... ................................ 322 List of Tables 2-1 Estimates of the Conversion of Rural Land.to Urban and Built-up Uses in the United States ............... 18 2-2 Percent of Base. Year Stock Converted to Urban and Built-up Uses During 1975 - 2000 .... 26 2--3 TotalAcres and Acres of Prime Land, for All Counties, SMSA Counties, and Counties Adjacent to SMSA Counties, Aggregated by U. S. Census Regions, Exclusive of Alaska and Hawaii, in Percentages ........................... @2@7 2-4 Total Acreage, Prime Acreage, and Built-up Acreage .Within 50-Mile Radii of the 100 Largest Urbanized Areas of the Coterminous United States ............... 28 2-5 Correlations Between Annual Rates of Population Growth and Percentage Prime Agricultural Land, 1960 1970 and 1970 - 1974 ...................... o........... 31 2-6 Conversion of Land From Rural to Urban Use for Selected Regions ............................. ....... 34 2-7 Conversion of Rural,Land to Urban Uses in 26 Towns in Massachusetts, 1.951.- 1971 ....... 37 2-8 Conversion of Rural Land to Urban Uses Estimated for Massachusetts, 1951 - 1971 ........... ................. 38 '2-9 Transition Matrix of Land Use Changes in Anoka County (part) Minnesota 1968 - 1975 - All Soils ...... 46 2-10 Transition Matrix of Land Use Changes in Dakota County (part) Minnesota 1968.- 1975 ................... 47 2-11 Idling of Farmland in Six Counties in the Philadel- phia Metropolitan Region, 1930 - 1970 ................ 62 ,2-12 Change inland in Farms: Regression Results for the Northeast and Cash Grain East _ ................... 65 2-13 Median Relative Shift of Agricultural Components Classified by Population Characteristics of Counties New York, New Jersey, and Pennsylvania ............... 70 3-1 increment in the Price of Land When a Parcel has Certain Attributes, Burlington County, New Jersey 94 4-1 A Classification of Land Use Controls ............. 113 4-2 Summary Descriptions of Land Use Controls 115 5-1 Comparison of Per Acre.Sale Prices in the Great River - Road Study Area (near LaCrosse,@Wisconsin) 1950-1975.o 142 5-2 offers and Appraisals for Phag'e I, Suffolk County Farmland Preservation Program .................. o ....... 150 5-3 Purchase and Lease Restrictions in Massachusetts Towns ........... o ........... o.......... o ......... 164 .5-4 Summary of Saskatchewan Land Bank Commission Operations ................. 171 5-5 SAFER and IDV Retirement Program Land Activity, 1964 - 1975 ....... o ................................... 180 5-6 Provisions of Exclusive Agricultural Zoning Ordinances 183 5-7 Minimum Required-Lot-Acres-in-tho-M.-t-R-strictive .... e os . e--. - - ____ ____ . Agicultural Zones of Each Jurisdiction ... ............ 186 .5-8 Urban Pressure on Jurisdictions with Exclusive Agricultural Zoning ....................... 0........ 192 5-9 Changes to Exclusive Agricultural Zoning.to Accomodate Development .... ....... ... 194 5-10 Answers by Local Officials o Question: How Would You Evaluate Your Experience With Agricultural Zoning So Far? ....................................... 197 5-11 Provisions of State Differential Assessment Laws., 1977 .................................................. 234 5-12 Correlation Between Acres of Differentially Assessed Land Per Square Mile (1973) and Various Characteris- tics of Townships in the Chicago Area ... ............. 237 5-13 Participation in California's Land Conservation Act .. 240 5-14, Tax Rates on Capital Gain: Vermont Land Gains Tax ... 245 5-15 Formation of Agricultural Districts in New York, 1973 - 1976 .................................... * ..... 252 5-16 Participation in New York's Agricultural Districting Program ....... ................... ...... 254 5-17 Comparison of New York Agricultural Districts and Oregon Exclusive Farm Use Zones in Mitig ating. Problems Due to Nearby Urban Development ............. 258 .6-1 Characteristics of Controls Relating to Initial Enactment .......................................... o. 261 6-2 Characteristics of Controls Relating to Implementa- tion Onc.e Enacted, ................ o......... o ......... 263 7-1 Characteristics of Controls Relating to Effective- ness,, ..... o.......................... o.o.o ........... 312 List of Figures 1-1 overview of Study ....................... ......... 6. 2-1. Class I and Il Soils, 1967 and Population_1970 ...... 15 M Class I and II Soils, 1967 and Population Increase, 1970 1974 ....... o...... 16 ..2-3 Urban'Land Requirements as a Function of Population Density at the County Level ......................... 21 2.-41 Urban Land Requirements as a Function of Housing - 'Density at the County Level ............. ............. . 22 2-5 Land Area Within.50 Miles of the 100 Largest Urbanized Areas ................. - .................. 29 2-6 Location of Cropland, 1967 and Population Growth, 1960 - 1974., in California 41 2-7 The Relationship,Between Urbanizati-n .... *@*e Loss of o and h Irrigated Cropland Harvested'During 1959 - 1969 for. 20 Metropolitan Counties in California .. **-*-- . 42 2-@8 Built Up Land in Anoka County, Minnesota.-, .... o ........ 44 2-9 Built Up Land in Dakota,County, Minnesota .... 45 2-10 Expansion of Urban Land Use in Massachusetts, 1950 - 1970 ........ ............ 49 2-11 Townships with Potential for Conflict Between Agriculture and Urbanization ...... 60 2-12 Farmers' Response to Urbanization in the Context of Other Exogenous Forces and,Cohstraints ... o ........... 75 @3-1 A Simplified Model of the Land Market of the,Rural- Urban Fringe ..... 80 3-2 Average 'Price of Parcels Sold in Five New Jersey Counties 1972 - 1976 by Size of Parcel .......... 92 3-3 Average Price Per Acre of Parcels Sold in Five New Jersey Counties, 1972 1976 by Year Sold ....... o .... 93 3-4 Farming by Region 1959 1974 .... ...... . 102 3-5 Index of Prices Paid by Farmers and Prices Received by Farmers for All Farm Products ... ......... o .... o... 106 3-6 Regional Concentration of Some Farm Infrastructure, 1958 and 1968 ....... o ............... o ............. 109 4-1 The Effect of Land Tax on the Supply of Land in Rural Areas .............. o ...................... 133 5-1 Location of Optimum Farmland and Parcels Offered ..... 148 5-2 lGross' Activit Levels of SAFER .. .............. o ...... 178 5-3 The Vermont Act 250 Permit.Process ........ .... 225@ 5-4 Process For Forming Agricultural Districts in New York ...... 251 5-5 Participation Rate Agricultural Districts in New York ............................................. 253 6-1 Supply and Demand Aspects of Transferable Development Rights ................................... 283 6-2 Estimated Development Value of Farmland in Five New Jersey,Counties .................................. 293 Chapter 11 INTRODUCTION A. Perspective From the earliest days of European settlement, the American, .1andscapp was regarded by perceptive commentators as'a garden in- .corporating, combining, and, generating a number of powerful cul- tural.elements having to do with the ifidividual,work, the land, and the'relationships among them. As the historian Henry Nash Smith summarized it.in his interpretation of the West, "the symbol of the garden embraced,a.cluster of,,metaphors, expressing fecundity, growth, increase, and'blissful labor in the earth, all centering About the heroic figure,of,.,the idealized frontier farmer armed with that supreme agrarian weapon, the sacred plow.ft.. Cultural,characterist.ics related to this garden image include 1) a belief that a farmer,,with hard work, could become prosperous, and.if he didnot, he could always move to the frontier; 2) a very individualistic outlook enhanced by isolated farmsteads but, tem- pered by voluntary collective activities; 3) private ownership of land by many small landowners; 4) an egalitarian society but one in which worth was-measured by prosperity and,hard work; and 5) an un- bounded,frontier. These characteristics. were identified by Lemon in.describ- Jng Southeast Pennsylvania during colonial times, but to some extent they persist nearly everywhere in the country. They -2- have been and are being modified, however, by natural limits and by social forces which-have overtaken them. Leo Marx, for example, has described the cultural impact of "the machine in the garden,," the advent of the industrial society which in many 'ways conflicted with the idyll of the garden. The closing of the frontier is a second prominent example of a constraint limiting and altering the garden image. The combination of science, technology, indust .rialism, and the realization of the finite- ness of resources gave rise to a functional or utilitarian view ofthe landscape, exemplified by the conservation movement at the end [email protected] century,which put emphasis on the efficient use of natural resources including the soil (Hays, Ekirch). Today we a,re witnessing'still another conflict with the sturdy remnants of the garden image, this time with the.expan- Sion and'decentralization of the largely urban population of the United States into the suburban and rural hinterlands. This contemporary conflict is focused on two issues: 1) the visible' loss of the ruralness of much of the landscape and the virtuous images of life style that ruralness still creates in many people's minds, and 2) the potential for the loss of agricultural pro- ductivity that the conversion of rural land to urban uses may entail The very components of the garden image of the Landscape make it difficult to resolve the conflicts of urbanization and -3- ...the garden, For example the individualistic outlook toward land use and the belief in privat.e ownership of land, the tenets,of -the garden image, are part of the.problem of urban incursions into rural areas, not part of the.solution to-saving the garden from the effects of urbanization. It is' not our purpose hereto characterize the cultural and historical context of this conflict--which would be a major ..undertaking in itselE. Rather we shall concern ourselves with thewidespread and growing interest of the federal government, states and localities, in saving the "garden" from urban intru-. sions. Tn.particular, we shall [email protected] concerning the use of the land along the many rural-urban fringes of the nation. First, what is the nature,ot,the effects of urbani.- z4tion,on.rural lands and agricultural activity? Second, rhat is being done about.it ? And third, are any of these-responses potentially effective in altering the pattern of change in,the landscape.? We certainly cannot be definitive aboutth.e answers ..to any of these questions, and,in fact,it may be best to let.the readerdecide the importance of the effects of urbanization on .the rural landscape and the potential effectiveness of land use controls. We have.gathered-some new evidence on these questions, assembled and collated the work of others and studied several dozen of the attempts at enacting and implementing land use -4- controls; and while the questionsare clear-,-t@e-ansvers are not. Our contribution,then,would seem'to be in the claritication of the questions and in enlargement of the data base from which to answer them rather than t.h-e.an.sw-e.r...s.'-..thems,el.ve-s. B. General Framework for'the Study Very broadly speaking, the goals of the programs we are Study- ing fall into two overlapping categories--the retention of farm- land and the preservation of open space. Programs in the first category are designed specifically to encourage farming activity in a certain area subject to development pressures and generally do not consider nonagrieultural land uses as part of the rural landscape to be protected. One recurrent feature of these pro- grams is emphasis on protection ot the better soils. Programs in the s''econd category are oriented.toward preservation of open space threa tened by development pressures. The goals ot these programs generally reflect a variety of values: aesthetic values of rural landscapes, ecological values of plant and animal habitats such as wetlands or wilderness areas, functional and conservation values such as protection of topsoil, avoidance of f,i" hazards, avoidance of pollution of ground water, and so on, and in some cases, recreational values such as those provided by easements along scenic trails, although these are often dealt with by means of public purchase of land for parks; these two -5- categories of goals clearly overlap to a large extent,, but inherent conflicts do exist. Weview the introduction of a particular land use.control as an intervention in the on-going processes'of land use change, and our-study objective is to determine, as clearly as is possible, vrhether that intervention has any significant Otfect in main- taining A desired pattern of land uses. A government program is only one of the many factors which affect changes in the pattern of.land uses. Theretorel, the identical public program in ditf- erent circumstances may lead to different results; even if the desired Pattern ot land uses Is maintained while a program is in effect, one,may not.necessarily conclude that the program.was critical in achieving.thf-. result. An overview of the Study is diagrammed in Figure 1-1. The patterns of urbanization and population decentralization occurring ,over the country lead directly to the conversion of land from rural to urban.us,es. They also induce changes in the,ru'ral landscape.such as the idling of farmlana,ana changes in the type -of agricultural activity occurringLin the sphere of urban influ- ences. Besides urbanization and population decentralization, these changes in the rural landscape are influenced by a number of factors exogenous to any land use control program; the operation of the land market itself, the viability of agriculture in a par- ticular region,, attitudes of the courts, and attitudes of the people in general toward land use patterns and the 'control of those patterns. -6- Figure 1-1 OVERVIEW OF STUDY Program Goals 1. Farmland retention 2. Open space preservation Characteristics of Land Use Control Programs 1. Point of attack: direct or indirect 2. Complexity Changes in Land Use 3. Cost 4. Certainty 1. Conversion of land to urban uses Urbanization and 2. Idling of farmland Population 3. Changes in type of Decentralization agriculture Factors External to Land Use Control Programs 1. Land market forces Programs Studied are: 2. Attitudes of courts Purchase of development rights 3. Popular attitudes Purchase and subsequent lease 4. Viability of agriculture with restrictions Purchase and.subsequent sale with restrictions Exercise of ri&t to preempt Inverse condemnation Exclusive farm use zoning Transfer of development rights Development permit systems Differential assessment for prop erty tax Differential assessment for federal estate or state income tax Capital gains tax on land Agricultural districting- -7- lAnd.US-e. controls are introcluced.in the hope ot altering the pattern of changes in land use resulting from urbanization and population decentralization. The goals behind this inter''Vention., 'farmland retention and open s .pace preservation, are shown as affecting the characteristics ot the land use program. The results of a land use program--its effects upon the larldscape--must be measured against a number ot criteria. It is more than sL ly a question of the quantity of land protected. IMP First, to what extent can the maintenance or preservation be ascribed to the program rather than to o ther operative fa .ctors? Increased prices to'r farm products or a recession in the:housing market"both.have contributed to A,slowing of the loss ofagricul- tural land in some localities, for example, and these must be considere',d:along with land use controls.- Second, every acre retained it the desired use may not be .of the same' value. Some farmland has better.soil than others, is'bu'tfered from urban or suburban development while other and tome .farmland is broken up by such development. Some land is of greater aesthetic importance than other land, and some land is closer to urbAn'centers so that its landscape value can be en- joyed by more urban people. In short'. quality of land and loca- .tion make a difference to the value which can be ascribed..to retaining an acre of land. Third., the permanence of the retention should be considered. One type ot lana use control might be expected.to be relatively Ion.g lasting, another type might be designed to be a stopgap measure, and a third might be subject more than others to political attack and possible change over the years. Number of acres,, then, must be interpreted with care as a measure of program effectiveness. We have neither the analytic framework nor the data to take accountof all the qualitications listed above, to say nothing of many other qualifications which might be relevant. In tact, it is.near.Ly impossible to estimate how much farmland or open space was "saved" from-conversion or idling due to. a land use program. The programs are too new and the data too scarce. However,, it is possible to identity the 'weak and strong points of a.program with particularcharacter- istics that bear upon how much open space can be preserved or farmland retained under the,intluence of urban pressures. It is this identification of program characteristics that we shall set as our goal. From this analysis, then, we should be able to say in a general way what types of programs are more likely to be effective under certain conditions than others in preserving open space or retaining farmland. The organization of this report follows that of Figure 1-1. We begin in Chapter II by reviewing the nature of the problem, the land trom rural to urban uses, problem being the conversion 0 the idling of farmland due to urban pressures2 and the changes in @'agricultural activity,due.to the pressures of urbanization. Be- cause ot the availability of dataVe are torced to concentrate ontarmiand and can give relatively little attention to other types of open space in this chapter. This is. not so severe a short- coming as one might at first think, though, since many changes in the landscape occur on agricultural land and since so many Aand use programs are oriented toward tarmlahd retention. In Chapter III we summarize the factors affecting changes in the landscape external to land use controls such as the land market and'th4E viability of.agriculture. A detailed discussion ot each of twelve types ofland. use controls is presented in Chapter IV with case studies ot actual experiences) insofar as there may be actual experiences with some of the controls, Seven of the controls affect'lano use .directly without any intermediary steps required: Purchase ot development rights Purchase ana subsequent lease or sale x-ith restrictions Exercise of the right to preempt Inverse condemnation Exclusive farm or rural u,--e zoning Transter of development rights Development permit, systems -10- Four of the controls are designed to affect landuse changes in- directly through incentives: Differential assessment for property tax Differential valuation for Federal estate and state inheritance taxes Capital gains tax on land Agricultural districting Then. in Chapter V an analysis of major characteristics pertaining to the enactment or implement ation of land use controls is carried out: costs, complexity, and certainty are given particular atten- tion. The potential effectiveness of various land use controls is assessed in Chapter VI. In this assessment, we draw together the processes.of urbanization and population decentralization, factors exogenous to the land use control programs, and the characteristics of theland use controls relevant to enactment and implementation to evaluate the potential effectiveness of different kinds of con- trols. As previously noted, it is not possible to present a de- finitive evaluation of any of the controls -- they have not been in effect long enough and in most cases it is not even possible to obtain quantitative information on the extent to which.land in the pr ogram has withstood the pressures of nearby urbanization. All we can do is assess potential effectiveness at this point. Chapter II THE NATURE OF THE PROBLEM The growth and rearran gement of the population across the nation constitutes a primary force affecting the decline,of compet- itively prpductive farmland., the intrusion of.urbanization into for- @est.land,, @he development of wetlands, and in general, changing the appearance of the American landscape. Broadly speaking, the ur- ban., suburban., and exurban development accompanying these.popu- lation changes produces two types of effects upon the landscape: direct effetts--those which cause the use of the land to be-changed from rural'to urban,, and indirect effects--those which cause rural landowners t'o feel uncertain about thecontinued rur.al.ness of their locality and consequently to be gin alterin g their land use prac- tices in response to this uncertainty without actually converting the land to urban uses. our analysis of these problems concentrates primarily upon agricultural land for five reasons. First, the obvious importance of food'production areas for the long run well-being of the na- tion and the world has made their continued viability the subject of public concern. Setond, this is theonly type of land use for which extensive data are available and for which a numberof pre- vious studies have been done concerning the effects of urbanization. Third, agricultural activities cover about one-third of the nation's land (excluding Alaska) and many of the nation's urban centers are -12- located in,important agricultural regions. And fourth, agricul- tural activities experience a number of indirect effects from urbanization which are not felt in other types of land uses. This is not to slight the importance of urbanization on forest land,, wetlands, desert, or other landscapes,.but there is simply less information available about them on which to draw any conclusions. A. The Direct Effects of Urbanization The direct effects of urbanization on the rural landscape are the conversions of land from rural to urban uses. These effects may be brought about by increases in population in a particular region such as in the rapidly growing Phoenix metropolitan area, by decentralization of population from a metropolitan core as is occurring around many declining cities in the Northeast, or by scattered development in nonmetropolitan areas, including second homes, as has recently been occurring overmuch of the country (Beale, Beale and Fuguitt, Vining and Strauss, and Zelinsky, et al.) Thus, the conversion of land to urban uses may be associated with re- gional growth, decentralization of the population into the suburbs and exurbs, and the revival of growth in nonmetropolitan areas of the country. These development processes can be characterized in terms of the types of land that are converted to urban uses: for example, we may express the direct effects of urbanization in terms of the conversion@of land classified by its previous use--cropland, pasture or rangeland, woodland, wetlands, old fields, or other vacant".land. Or we may characterize the conversion processes in terms of the physical-characteristics of the land being con- verted. Of the various ways of doing so', the most widely available useful information is that of soil capabilityclasses developed by the Soil Conservation Service foruse in erosion control. [Soil Conservation Service, Conservation Needs Inventory.] These cap- pOility, classes take into account slope, drainage, soil depth, and the.like.. Capability Classes I and II, which have the least limitations for agricultural use (Class I has no limitations) also are often quite suitable for development since they are flat and ,well drained.(but may have other limitations for development). It should be noted that soils of capability Classes I and II are not necessarily the best soils for agriculture, in, the sense that. they are the most productive,but the Soil Conservation Service. has noted that Classes I and II are almo.st always.among the most., productive soils, which include some capability Class III soils as well. For lack of a better term, we shall call soils in cap.- ability Classes I and II "prime" throughout this report, recog- ,nizing that prime means different things to different people. We shall now turn to a discussion of the'conversion of rural land to urban or built-up uses at three levels of analysis: na- See Raup (1976) for a more complete discussion of the concept of- "prime" land. -14- tional, regional, and local. The nature of the effects of ur- banization on rural areas is-different at these different scales, the national being more than the aggregate of local problems and local problems reflecting different concerns than the national ,issues. 1. The National Perspective The overall pattern of population and population growth in relation to the location of the soils in capability Classes I and II (prime soils) throughout the nation can be seen in Figures 2-1 1 ,and 2-2. The beat land is in the Middle West where population d,ensity varies from very low to very high and where population growth varies greatly as well. There is also a noticeable bias of population toward areas with better soils as one might expect, but the bias is certainly not everywhere present nor overwhelming where it does occur. We now turn to a closer examination of pop- ulation pressure on rural land and the subcategories of farmland, cropland, and prime land at the national level. There are few nationwide estimates of conversion of rural land to urban uses from which to gain a perspective of the magni- tude of the urbanization processes. One source of information is the Conservation Needs Inventories (CNI) for 1958 and 1967 which The production of Figures 2-1 and 2-2 was funded in part by NSF Grant SOC-76-04821 to Daniel R. Vining. CLASS I AND 11 SOILS AND POPULATION, 1970 100 200 300 400 500 Percent of Total Land Area in iEGIONAL SCIENCE RESEARCH NnTUTE M1 les Soil Capability Classes I and 11 under 5.0 % 5.0 - 24.9% 25.0 - 49.9 % 50.0 - 74.9% One Dot Equals 10,000 Persons SOURCES 75.0 - 100.0 % U S. Bureau of the Census, County and City Data Book, 1972. National Inventory of Soil and Water Conservation Need L2!Li CLASS I AND 11 SOILS AND POPULATION INCREASE, 1970 -1974 F@4 D 100 20b 300 400 50OMiles Percent of Total Land Area in REGIONAL SCIENCE RESEARCH INSTITUTE Soil Capability Classes I and 11 under 5.0 % 5.0 - 24.9% 25.0 - 49.9 % 50.0 - 74.9 % One Dot Equals 1,000 Person Increase in Population SOURCES: 75.0 - 100.0 % (increases of less than 500 or decreases are not shown) U@ S Bureau of the Census, Current Population Reports. 1976. National Inventory of Soil and Water Conservation Needs. 1967 -17- includes estimates of urban and built up land that is not federally owned. These data are based on site inspections of randomly sampled plots of 100 or 160 acres constituting a 2% random sample of nonfederaliand in each county. Comparing the two inventories, the annual conversion of a.ll rural land to urban uses between 1958 and 1967 is around 1.1 million acres per year. Assuming these conversions took place in proportion to the amount of land in farms.2 cropland, and prime land, about half the con- version took place on farmland, about one-third took place,on cropland and 30% took place on soil capability Classes I and II. See Table 2-1. A more recent estimate made by the Soil Conservation Service for the period,1967 to 1975 using 6000 of the sample plots from the 1967 Conservation Needs Inventory gives a dramatically dif- IThe Conservation Needs Inventory defines urban and built-up areas as follows: "includes cities, villages, and other built-up areas of more than 10 acres each in size, industrial sites, railroads, roads, cemeteries, airports, golf courses, shooting ranges, in- stitutional and public administrative sites, and similar types of areas. This separation will. not necessarily include all land in- side city and village limits, and will include some land outside of such limits. Area of nonfarm rural residences less than 10 acres in size are accounted for as other land not in farms and- are not included in urban and built-up areas." Table 2-1 --ESTDIATES OF THE CONVERSION OF RURAL LAND TO URBAN AND BUILT-UP USES IN THE UNITED STATES Annual Shift to Urban &-Built-Up Uses (Acres) I RSRI Estimate All Rural Land Farmland2 Cropland Prime Land 4 In SMSAs 1959-1969 (to urban uses) 489,000 2400000 163,000 146,000 In Non-Metropolitan Areas 1959-1969 (to urban uses) 2730000 133,000 91,000 82*000 In Non-Metropolitan Areas 1959-1969 (to rural transportation uses)5 140,000 69,000 47,000 42P000 Total U.S. 1959-1969 (to Urban & Built-Up Uses) 902,000 442,000 301$000 270,000 RSR1 Estimate Using CNI Base Total U.S. 1958-1967 (to Urban & Built-Up Uses) 10148,000 563,000 3830000 343,000 Potential Cropland Study-CNI Estimate Total U.S. 1967-1975 (to Urban &.Built-Up Uses) 2,050,000 995,000 598,000 753,000 00 Notes: 1. Definition of Farmland and Cropland are reportedin the Census of Agriculture, except for Potential Cropland Study which uses Conservation -Needs Inventory determi7ation of what is cropland or farmland. In general, farmland.includes cropland, pasture, rang@, farm woodlots, farm building lots, wasteland, farm ponds, etc. Farmland includes cropland, pasture, and range. 3. Prime Land includes land in soil capability Classes I.and II. 4. Urban Uses includes residences, industry, commerce, recreation and urban transportation. 5. Rural Transportation Uses includes ru:tal highways, railroad rights-of-way, and airports. Estimated from U.S. Department of Agriculture, ERS, Misc. Publ.-1290, 1974. _19- fe'rent picture. [Diderikson and Sampson.Potential-Cropland Study]. .It indicates that about two million acres of rural land are converted to urban uses annually, about half of which comes from a combination of cropland, pasture and range-, 30% from cropland itself, and about 38% from soil capability Classes I and II (last row Table 2-1). Because'of the total amounts of,*rural land,los,t according to the two SoitConservation estimates are so strikingly different, one is led to believe that one estimate is in error o r that there has been tit change,in the pattern of urban development after 1967, perhaps reflecting the revival of population growth in many nonmetro.- .politan counties which occured in the 1970's [Beale, Beale-and Fug- uitt, Vining and Strauss). To attempt to resolve this issue,,, we made. an independent set of estimates of conversion of rural land. between 1960 and 1970 and between 1970 and 19,74 using data from sources other than the Conservation Needs Inventory. As the basis for making estimates of the conversion of land.to urban uses, we compiled land use data for 50 counties in the eastern half of the United States from various local and regional studies. These counties were selected because.they are in urban regions or very urban states and because they were the only reliable sources using information from about, 1970,that we were able to locate after writing to regional.planning agencies all over the.country. The percent of land in urban uses (residential, commercial, industrial, -20- transportation, institutional, and recreational)1was estimated as a function of population density in 1970 (for-41 of the coun-' ties) and.as a function of housing units per square mile in 1970 (for 46 of thetounties) using ordinary least squares regression analysis. The results are shown in Figures 2-3 and 2-4. Housing density is a more useful predictor of percent of land in urban uses than population density--especially for many.counties which are ex- periencing population losses from old central cities but are none- thelleag undekg oing suburbanization processes, the full extent of which would not be captured by looking solely at'population changes inthe county during that time period. For the,period 1970 to 1974, the only estimates of urbanization pressures are those of population changes, so we cannot make use of the housing density- percent-urban land relationship for data after 1970; we must use the population density- percent urban land relationship instead. From the graphs it is apparent,that the proportion of land in any county classified as urban increases at a decreasing rate as population density or housing density increases. Thus, in counties with lower population or housing densities,population 1Doubtless there will be minor discrepancies between the CNI de- finition of urban and built-up and these various regional and local estimates of land in the urban uses,defined here. @-2 I- -Figure 2-3 URBANIAND REQUIREMENTS AS A FUNCTION OF POPULATION DENSITY AT THE COUNTY LEVEL 100 .6631 Percent urban 180587(POPDEN) 2 R 92 N 41 75- co 14 cc 50- ca .0 44 25- 0 S4 2 3 4 5 Population density (persons/acre) -22- Figure 2-4 URBAN LAND REQUIREMENTS AS A FUNCTION OF HOUSING DENSITY AT THE COUNTY LEVEL Percent Urban 0.708(HUDN70)0 617 100 R2 0.87 N 46 cc V4 75 Cd V r. 50 -W r" :01 tw 0 25 500 750 1000 1250 1500 Housing Units Per Square Mile -23- growth can replace rural uses of the land at a higher rate than such densities might at first suggest. This is because of the lower densities of nonmetropolitan development and because of th-e necessity of installing in frastructure such as roads before very much urban development can occur. By calculating the estimated percent of land in urban uses ,as a function of housing density for all metropolitan counties in the U.S. using the relationship described above for 1960 and 1970 (i.e., by assuming, 1) that the percent urban housing density relationship applies to all counties, and 2) that it applies to both'1960 and 1970, a pair of simplifying assumptions) we.can, make crude estimates of the annual conversion of land from rural to urban uses. For nonmetropolitan counties we estimated the total rural land converted to urban uses (excluding'rural trans- portation) by multiplying the average acreage of rural land converted to'urban uses per housing unit built in metropolitan counties times the number of housing units built per yearduring 1 1960-1970 in nonmetropolitan counties. The results of these calculations are summarized in Table 2-1. The total conversion figures are fairly close to those obtained This may un.de rstate conversion of rural land because nonmetro- politan development is typically molre land extensive than me- tropolitan development. -24- by using the Conser vation Needs Inventory for.1968 to 1967, al-, beit slightly smaller. As a second part of our independent estimates of conversion of land-to urban uses, we applied the percent urban - population density relationship to all counties for 1960, 1970, and 1974 and computed the annual changes in built-up land. It should be noted that this method underestimates the conversion of land to urban uses.since it does not completely account for suburbanization in counties where there are declining populations in central cities or other older developed areas. However.- the annual rate of con- version after 1970 is certainly nothing like the doubling obtained by the Soil, Conservation Service for the period 1967.to 1974 in comparison to 1958 to 1967; our estimate of the annual acreage built up between 1960 and 1970 is 444,000 acres and between 1970 and, 1974 is 522,000 acres. Thus, even though we can document the re- vival..of population growth in many nonmetropolitan counties in the 1970's..we still cannot account for the drastic difference between the Conservation Needs Inventory estimates for 1958 to 1967 and the study by the Soil Conservation Service for the period 1967 to 1974. The source of this difference remains an unanswered ques- tion. Is the national pattern of rural land conversion something to be concerned about? At this level of analysis, the question -25- reaIly.becomes one of whether urbanization threat' ens our natural resource base. Alt hough some forestry activities are being in- vaded by urban development, most.research has been concentrated on the agricultural base of the nation, especially the development of prime farmland. John Fraser Hart [1976] ha.s estimated that by the year 2000 no more than about 4% of the nation's land will be in urban uses; indeed whether we look at all rural,land,.farmla"nd, or cropland, assuming the present rates of conversion, it is unlikely that more than 4% of the current land-in any of these categories (including .Alaska in the base) would be developed. See Table 2-2.' Thus, we will not be experiencing wall to wall urbanization. However, there are questions concerning the quality of the land that is being converted to urban uses and the nation's ability to replace cropland or prime.cropland that is converted. to urban uses. There is a clear bias of metropolitan development toward counties with bett-er -Soils. S,ee TAble 2-3 and, compare columns 4 and 5 and columns 6 and 7. The same kind of picture can be obtained from looking at the bias of prime land toward those counties lying largely within 50 miles of one.of the one hundred largest urbanized areas in the conterminous United States (Columns 2 and 4 in Table 2-4 and Figure 2-5). Table 2-2 PERCENT OF BASE YEAR STOCK CONVERTED TO URBAN AND BUILT-UP USES DURING 1975-2000 (Assuming Present Rates of Loss) Base Acres All Rural Land Farmland Cropland Prime Land Rural land Area in 1975 (ex. Alaska) 1,839,000,000 1.2 - 2.8* ---- ---- ---- Farmland,in 1974 19021$0001000 1.1 - 2.4 ---- ---- Cropland in'1974 438,000,000 ---- 1.7 31.4 ---- Prime Land in 1975 385,OOOsOOO ---- ---- 1.8 4.9 Potential Cropland' in 1975**1 11190009000 ---- 6.8 13.5 ---- Potential Prime Crop- land in 1975** 60$0001000 ---- ---- ---- 11.3 -31.4 Notes: Low estimate based on RSRI estimates of the conversion of rural land to urban and built-up uses, high estimates based on potential cropland studyi Land currently non-cropped with high or medium potential for conversion to cropland. ..Source: 1975 Potential Cropland Study. Land is of high or. medium potential for cropland according to the Soil Conservation Service if it could be..br.ought into production under-current-economic conditions -- i.e., if it is not in too small parc:els, not heavily wooded, not water logged, and the like. Table 2-3,- TOTAL ACRES Aft ACRES OF PRIME LAND, FOR ALL COUNTIES, SMSA COUNTIES, AND COUNTIES ADJACENT TO SMSA COUNTIES AGGREGATED BY U.S. CENSUS REGIONS, EXCLUSIVE OF ALASKA AND HAWAII,, IN PERCENTAGES Percent of Region's Percent of Land in Region's Percent Percent Percent Percent of Percent.of. SMSAs and Prime Land of U.S. of U.S. Land in Region's Region's counties in SMSAs Land Area Prime Land Region Land in Prime Land Adjacent and Adjacent in Region in Region Prime SMSAs in SMSAs to SMSAs Counties Census Region (2) (3) (6) (7) New England 2, 1 1.,4 11.7 22.6 24.3 41.5 '40. 7 Middle Atlantic 3.4 3.6 @18.8 41.0 49.8 82.6 90.11 South Atlantic 9.0 10.0 19.4 24.8 20.9 51.7 ro 1. 7 East North Central 8.2 20.2 43.1 27.2 32.3 64.8 74.9 West North Central 17.1. 33.5 34.3 7.2 6.2 23.8- 24.5 East South Central 6.0 7.6 22.2 18.4 22.9 52.2 51.7 West South Central 14.4 16.2 19.7 17.5 23.8 55.9 65.8 Mountain 28.9 4.0 2.4 7.5 9.7 27.1 31.9., Pacific 10.8 3.5 5.6 30.5 46.8 51.3 72.3 Nation 100.0 10.0.0 17.6 16.7 20.2 43.2 51.7 Sources: National Inventory of Soil And Water Conservation Needs, 1967, State Summaries. U.S. Bureau of the Census, County and City, Data Book, 1972" (U.S. Bureau of the Census, Washington, D.C.), Table 2. Table 2-4 TOTAL ACREAGE, PRIME ACREAGE, AND BUILT-UP ACREAGE WITHIN 50-MILE RADII OF THE 100 LARGEST URBANIZED AREAS OF THE CONTERMINOUS UNITED STATES Total Area Prime Area Built-Up Area Urbanized Areas (PeTc-ent (Percent (Percent Prime Acreage Prime Acre'age (ranked according (Acres) of U.S.). (Acres) of U.S.) (Acres) of U.S.) Yotal Acreage (Total>@3uilt-Up) to size) (1) (2) (3) (4) (5) (6) (7) (8) 1-10 46,531.1 (2.6) 11,555.4 (3.4) 9,228.6 (15.1) .248 1.310 11-20 42,950.4 (2.3) 10,454.6 (3.1) 4,386.3 (7.2) .243 .271 21-30 43,372.6 (2.3) 8,843.2 (2.7) 3,249.0 (5.3) .204 .220 31-40 35,285.7 (1.9) 11,831.'6 (3.6) 2,180.6 (3.6) .335 .357 41-50 37,055.3 (2.0) 7,871.7 (2.4) 2,604.4 (4.3) .212 .228 51-60 27,053.4 (1.4) 6,488.4 (1.9) 1,464.8 (2.4) .240 .254 61-70 39,889.9 (2.1) 6,458.4 (1-9) 1,870.8 (3.1) ...162 .170 71-80 39,427.8 (2.1) 11,800.2 (3.5) (3.1) .289 .304 81-90 31,287.7 (1.6) 9,046.5 (2.7) 1,558.8 (2.6) .267 .281 91-100 38,952.9 (2.1) 10,419.7 (3.1) 1,818.3 (3.0) .267 .281 Total, 100 Largest 381,806.8 (20.1) 94,769.7 -(28.4) 30,227,6 (49.7) .248 .270 00 Nation 1,897,052.8 3332172.5 60,875.9 .176 .181 1 Sources: National Inventory of Soil and Water Conservation Needs, 1967, State $ummaries. U.S. Bureau of the Census, "County and City Data Book, 1972" (U.S. Bureau of the Census, Washington, D.C., Table 2, pp. 29-545. U.S. Bureau of the Census, "U.S. Census of Population: 1970 Vol. I, Characteristics of the Population, Part A, Number of Inhabitants" (U.S. Bureau of the Census, Washington, D.C.), Table 21. Figure 2-5 LAND AREA, WITHIN 50 MILES OF THE.100 LARGEST URBANIZED AREAS P@l -Z, C-A 0 000 206 300 400 500 k4iles -30- Despite this locational bias of metropolitan areas, at the current rates of conversion the proportion of the stock of the best soils to be converted to urban uses by the year 2000 is @likely to be under 5% (Table 2-2). Indeed, the correlations be- tween annual rates of population growth and percent of land in soil capability Classes I and II (using counties as the unit of observation) are close to zero or slightly negative for the periods 1960-1970-and 1970-1974 (Table 2-5). This.shows no bias,of popu- lation growth rates toward counties with the better soils but it does not mean that the-better soils are not being built upon. Can the cropland and prime cropland, that is being developed for urban uses be replaced at reasonable cost by other lands? This is an important question in light.of recent climatic con- ditions and increasing world demand for food. Although many people minimize the effect of climatic changes on American agri- cultural outputj others such as Schneider have argued that there is growing evidence of greater climatic variability from year to year in the entire nation and a noticeable cooling of the eastern half of the United States. Thus, increases in agricultural output in the future that are based on extrapolations of past years, which were unusually favorable for continuously high output, will be far too optimistic. We need a "Genesis Strategy", Schneider's argument goes, of storing agricultural output from good years to -31- Table 2-5 CORRELATIONS BETWEEN ANNUAL RATES.OF POPULATION GROWTH AND PERCENTAGE PRIME AGRICULTURAL LAND* 1960-1970 and 1970-1974 'Census Region 1960-1970 1970-1974 No. of'Counties New England .0 94 -.010 63 Middle Atlantic .088 .056 150 East North Central .078 -.345 436 West North Central -.115 -.270 619 South Atlantic -.167 -.179 East South Central .161 -.034 364 West South Central .037 -.0151 470 Mountain .-.103 -.150 278 .Pacific .232 -.115 133 Nation -..072 -.2331 3065 Unit of observation is county; Rhode Island, Alaska, and Hawaii excluded. -32- tide us over through bad years which will inevitably occur as they did following the seven years of good harvest described in the Book of Genesis. Besides increasing variability in climate and increasing world demands for food we are also likely to be faced with bind- inIg energy and fertilizer constraints on the agricultural indus- try which may have the effect of lowering crop yields in the future. Thus, it can be argued that we need the ability to replace cropland and prime cropland that becomes urbanized with land that is not now in cropland. This ability is summarized in Table 2-2, which shows that our national reserve of potential cropland and potential prime cropland (Diderikson-and Sampson) will be used up rather quickly overthe next fifty or more years if cropland and prime cropland are brought into production at the same rate that current cropland or prime land is converted to urban uses. In conclusion at the national level, the major problem associated with conversion of rural land to urban uses appears to be the long-term loss of future agricultural potential under conditions of poorer climate or great pressure upon American agriculture to supply foreign food needs. The problem is certainly not the devel- ment of even a moderate proportion of our land base -33- or cropland base; it is rather the effect on our food and fiber production fifty years from now under unfavorable but not far- fetched world-wide conditions. 2.. :Regional Perspectives. The conversion of rural land to urban uses is not a uniform process across the whole country. There are regional variations in housing style, topography, and urban pressures that contribute to differences in rates of conversion as well as to regional mag- nitudes of conversion. There are two issues that particularly interest us here: 1) the acreage of urban land used per new .person in different regions, and 2) the type of land converted to urban uses i.e., the presence of biases toward@conversion of farmland or forest land, for instance. our sources on such, information are scattered.so it is not possible to present a com- ,prehensive overview of the major issues by region of'the U@S. At best, we can address the issues partially for a number of over- lapping and not completely exhaustive sets of regions. With regard to the acreage of land used per additional person for urban development, Table 2-6 summarizes several regional studies Table 2-6 CONVERSION OF LAND FROM RURAL TO URBAN USE FOR SELECTED REGIONS All Rural Land Farmland Approximate Acreage converted Acreage Converted Definition of Region Time Period Per New Person Per New Person Farmland- Source 78 towns in New York 1951-1966 .193 .081 Cropland only Allee, et al. 48 western counties 1950-1960 .071 .067 Cropland & Dill & Otte Grassland (1970) 2 rapidly growing counties in Colorado 1956-1969 .234 .148 Cropland only Zeimetz, et al. 3 rapidly growing counties in Florida 1957-1969 .481 .030 Cropland only Zeimetz, et al. 5 rapidly growing counties in North Carolina & Georgia 1960-1970 .216, .043 Cropland only Zeimetz, et al. 90 SMSA counties in All land in Northeast 1959-1969 .112* .051* Farms This study 87 SMSA counties in All land in Cash Grain East 1959-1969 .115* .076@ Farms This study All towns in Mass. except heavily ur- 1957-1971 .280 ..083 Cropland and This study banized Pasture 4 fringe counties in Prime Farmland Kansas City SMSA 1969-1974 .290 .133 only (differs Shaklee slightly from SCS Classes I and II) obtained by multiplying acreage per new housing unit built by 3.3 persons per household. -35- _.includ.ing the results from new work in this study. It is evident that there is a great variation in the ar-reage of.rural land.converted to urban uses per person gained in pop- ulat.ion from one part of the country to another. This can be explained by both differences in style of development and the amount ofinfrastructure and other development needed (more will be.needed per new person.in.low density,counties than in high density counties,as we saw when examiningthe relationships be- tween population or housing unit density and percent of land,in urban uses). There is also a.great deal of variation'in the acreage of'' farmland converted to urban uses per person gained. One possible cause of a bias of development toward farmla nd, especially crop- land.9 is that in areas where there is little other flat, cleared land on which development can take place cropland becomes.a prime target. To investigate this ques, tion'we employed theiland use data compiled for Massachusetts by MacConnell for 1950-1 to 1970-1 and for the 26 towns in,Massachusetts for which Foster,constructed For the Northeast region.and the Cash Grain East (the.U.S..corn belt) region the conversion of rural land was,.determine,d using the relationship between percent of land in urban uses-and change in housing unit density described in the previous section. Changes in farmland were calculated assuming that farmland was converted to urban us,es in proportion to its percent of all land in the re- levant counties. The Massachusetts methods and results will be described in more detail later on. _36- transition matrices of land uses for the same'time period.' Table 2-7 shows the bias toward conversion of farmland'as opposed to forest or idle land in the 26 towns studied by Foster. The likli- hood of conversion to urban uses is the ratio of .the proportion of rural land of a given type converted to urban uses divided by the proportion of all land in the study area of a givery type. Develop- ment occurs more frequently on agricultural land and idle land than on forest land, which tends to be hillier in Massachusetts. Agri- cultural land and urbanization both tend to occur in valleys and lowlands, and so the threat of urbanization to agriculture is quite concentrate-d in these 26 towns., Foster's 26.towns are not representative of the state, however; they tend to.be located in the more rural parts of Massachusetts where @soil quality data were available to Foster., To estimate the loss of-Agricultural land, idle land, and forest land in the entire sta-te it was necessary to,.adjust the conversion of rural land per additional person for each category of rural land by.the same scaling facto r-so tha-t.the total of all rural land converted per person gained for the entire state equals that in- ferred from MacConnell's sample data on rural land loss. Highly ur- banized towns are not included in the calculations nor are they included in Table 2-8. These towns are already built up and include older cities and suburbs. As expected the table reveals both a -37- Table 2-7 CONVERSION OF RURALLAND TO URBAN USES IN 26-TOWNS IN MASSACHUSETTS, 1951-1971' Acres Convert.ed (2) (4) to Urban 'Percent of Likelihood Uses Per Rural Lan.d (3) of Conver- Net Addi- Area Con- Percent. sion to tional to, of Rural Urban Uses Person, Urban Uses Land Area 1951-1971 1and Use @1951-1971 1951-1971 in 1951 ((2) -.`(3 All Rural Land* 0.386 100.0 100.0 1.0 Active Agriculture 0.114 29.6 17.3 1.7. Intensive 0.059 15.3 9.11 1.7 Extens,ive 0.055 14.2 8.2 .1.7 Idle Land .0.-026 6.7 5.3 l.:3 Forest Land 0.246** 63.7 77.4 0.8 all land area except land.in urban uses and "other" land uses. **Calculated by subtracting actively farmed land and idle land con- verted to urban uses per person gained (from Foster).from all rural land 'Converted to urban,uses per person gained (from MacConnell (1975)). Source: Foster -38- Table 2-8 CONVERSION OF RURAL LAND TO URBAN USES ESTIMATED FOR MASSACHUSETTS, 1951-19.71* (1) Acres Con- verted to Urban Uses (2) (3) Per Net Average Annual Loss to Urban Additional Loss to Urban Uses, 1951-1971, Person, Uses, 1951-1971 As a Percent of Land Use 1951-1971 (Acres) the 1951 Base- All Rural Land 0.280 15,729 7.8 Active Agri- culture 0.083** 4,662 13.1 Intensive 0.043** 2,415 12.3 Extensive 0.040** 2'9247 14.0 Idle Land 0.019** 19067 8.2 Forest Land 0.178** 9,999 6.6 Includes all towns except those which were already highly ur- banizedin 1951. Calculated by multiplying each of th e rural land use coefficients for the 26 sample towns (Table 2-7, col. 1) by the ratio of rural land urbanized per capita in the state to rural land urbanized per capita in the 26 sample towns (0.280 0.386). Source: Foster -39- ratherjarge magnitude and proportion of agricultural land being converted to urban uses over the twenty years between 1950 and 1970. Onexegion deserving of special-attention is the.State of. California, which has been growing in population at an average annual rate of 2.7% in the 1960's and 1.2% between 1970 and 1974. This rapidly.urbanizing state ranks first in the value of agri- cultural production ($7,,366,364,000 in 1974) and there is a strong bias for development to occur on agricultural1land the land in small valleys and in the Central Valley. For example, Zeimetz, et al., found that.betwe.en 1956 and 1963, 70.1% of the urban development in Santa Clara and Santa Cruz Counties occurred on cropland, -which constituted only 16.3% of the land area,of the counties. Thus, there i.s the,potential for intensive conflict between urbanization and agr icultural-activities in this important agricultural state. California's great agricultural productivity is.based upon irrigation. In 1969, 82% of all cropland harvested was irrigated (some 6,195,000 acres according to the Census of Agriculture). Not too,surprisingly, though, there is a strong association between local declines in irrigated cropland harvested between 1959 and 1969 and density of. housin g units built between 1960 and.1970, suggesting that urbanization is intruding upon the State's agri- -40- cultural potential. See Figures,2-6 and 2-7. Yet in the 1960's irrigated cropland harvested statewide dropped only slightly from 6,217,000 acres in 1959 to 6,195,000 acres in 1969, indicating that farmers were able to expand:irrigation sufficiently to offset urban encroachmentupon irrigated farmland. Now with the severe drought situation and other demands. on water sources in California it is'unlikely that irrigation can continue to spread as urbani- ,zation expands -- indeed we might even expect irrigated acreage to decrease as water becomes scarcer and scarcer and concomitantly we would then expect California's preeminent position in supplying the nation with-fruits, nuts, vegetables, grains, cotton, and other agricultural products to be imperiled. Urban development ..of irrigated farmland can only exacerbate these circumstances. For the state as a whole, the magnitude of conversion of the best agricultural land between 1970 and 1985 has been projected by the California Office of Planning and Research to run about 41,380 acres per year. This includes all land in soil capability Classes I and II (which is largely irrigated) plus other cropland grossing $200 per acre or mote per year or land with an annual carrying capacity of one animal unit or more per acre per year. This projection was made by attempting to define urban growth boundaries for all cities with populations greater than 50,000 in -41- Figure 2-6 LOCATION OF CROPLAND 1967 AND POPULATION GROWTH, 1960 - 1974) IN CALIFORNIA Mostly cropland ZED Irrigated cropland Urbaniz ed areas One dot equals 2500 Person increase in population Cb 50 0 50 100 150 Miles SOURCES: National Atlais of the United states. US Census of Population, 1960 and 1970, and Current Population Reports,1976. -42- Figure 2-7 THE RELATIONSHIP BETWEEN URBANIZATION AND THE LOSS OF IRRIGATED CROPLAND HARVESTED DURING 1959-1969 FOR 20 METROPOLITAN COUNTIES IN CALIFORNIA 10 %A IRR CROP HAR = 28.091 -13.315 ln(,@HUDN) 2 SOLANO R 83 N 20 ,4 0 Ln ,-4 -10 RIVERSIDE 0 -20 0 cu SAN MATEO r-4 0 0. 0 0 -30 4J Estimated Regression Line co 0 $4 -4o 0 ALAMEDA co -50 U S., w -60 PL4 ORANGEO -70 1 50 100 150 200 250 300 350 Number of Housing Units Built per Square Mile, 1960-1970 -43- 1970 and estimating.the.voluine of the' best farmland required for urban development. .At the present time, ou Ir regional perspectives on the direct effects of urbanization on rural landscapes are quite limited and unsystematic. It is difficult to put together a coherent picture. Obviously, there are significant regional differences in the mAg- nitude and nature of urban development of.rural lands, but we can do no more than highlight a few scattered instances of these dif- ferences. Massachusetts' and California s experiences, for example, are certainly only partly applicable to other states which do not have the rough, costly-to-build upon,terrain that encourages de- velopment of agricultural lands there., 3. Local Perspectives At the subcounty level, the most remarkable feature of the urbanization process is its great dispersion over the landscape. Urban development proceeds by scatteration and some infilling rather than by accretion contiguous to past.development. This process may be seen in Figures 2-8 and 2-9,which show parts of Anoka and Dakota Counties near the cities of Minneapolis and St. Paul, Minnesota. The changes in land uses between.1968 and,1975 for these two areas are summarized in Tables 2-9 and 2-10, which show the percent of land in the category in row i in 1967 that was in the category in column j in 1975. Note that in Dakota County -44- Figure 2 - 8 BUILT UP LAND IN ANOKA COUNTY, MINNESOTA -IMF q % UP 65 Ali L % for' 0-v Miss is&, Moen 4 Al. 242 & Anoka J L 52 &or a cl Built up before Anoka and 1967 Hennepin County (part) 0 2 3 4 Minneapolis Built up 1967 iiii-ow x Saint Paul to 1975 Miles 45- Figure 2-9- BUILT UP LAND IN DAKOTA COUNTY) MINNESOTA 'Minneapolis Saint Paul 0 2 Oakote County part) Miles Built up before 1967 Built up 1967 to 1975 3A 1.1149, 0 1b - 25 P Aq Table 2-9. TRANSITION MATRIX OF LAND USE CHANGES IN ANOKA COUNTY (Part) MINNESOTA 1968-1975 ALL SOILS (Percent of 1968 Acreage in Uses Indicated in 1975) Use in 1968 Use in 1975 Total..Acreage 1968 Cropland, Other Orchards & Cleared Wood- Residen- Other Nurseries Land lands tial Urban Other Cropland, Orchards & Nurseries 85.6 5.8 0.1 7.1 1.4 0.0 56,396 Other Cleared Land 1.0 90.2 1.1 5.1 2.4 0.2 31,473 Woodlands 0.4 1.3 89.6 8.4 0.3 .0.0 30 , 790 aN Residential 0.0 0.0 @0.0 100.0 0.0 .0.0 Other Urban 0.0 0.0 0.-0 0.0 100.0 0.0 5,851 Other*- 0.1 0.0 0.0 0.0 0.1 99.8 7,809 Largely lakes. Table 2-10.. TRANSITION MATRIX OF LAND USE CHANGES IN DAKOTA COUNTY (Part) MINNESOTA 1968-1975 (Percent-of 1968 Acreage in Uses Indicated in 1975) Use in 1968 Use in 1975 Total Acreage 1968 Cropland.- other Orchards & Cleared Wood-, Residen- Other Nurseries Land lands tial Urban Other A. ALL SOILS Cropland, Orchards-& Nurseries @84.6 4.6 6.5 4.1 0.1 37,197 Other Cleared Land 0.0 77.0 3.6 11.4 7.2 0.8 8,094 Woodlands 0.1 1.1 84.9 12.5 1.4 .0.0 1OJ72 Residential 0.0 0.0 100.0 0.0 0.0 7,236 other Urban 0.0 0.0 0.0 0.0 100.0 0.0 211193 Other 0.0 0.0 0.0 0.0 0.0 100.0 2..504 B. PRIME SOILS ONLY Cropland, Orchard & Nurseries 88.0 3.6 0.1 5.4 2.9 0.0 23@666 Other Cleared Land' 0.0 75.0 2.1. 12.4 10.5 0.0 it552 Woodlands 0.0 0.13 84.7 15.0 0.0 0.0 1P090 Residential 0.0 0.0 0.0 100.0 0.0', 0.0 29181 Other Urban 0.0 0.0 0.0 0.0 100.0 0.0- 12038 other 0.0 0.0 0.0 0.0 0.0 100.0 157 -48- there is a slight preference for residential development to occur in wooded areas (that are often adjacent to lakes) but little differences in the matrix for all soils as compared with the matrix for prime soils only. In both counties, land develop- ment is proceeding at a moderately rapid pace. The scatteration of urban development at the local level brings about a number of indirect effects which will be discussed in the next section. But it is apparent that a relatively small amount of rural land converted to urban uses by this process will drastically alter the appearance of the landscapelmaking formerly rural areas'neither truly rural nor truly urban. Although the visual effects of suburban and exurban land uses may be very apparent driving along any road, much undeveloped land mav remain. From the local perspective then, we can see that.it is not necessarily the volume of conversion of farmland, woodlands, or other components of the rural landscape to urban uses as an absolute acreage that matters, but rather the dispersal of this development over the landscape. The visual effects are thus another of the .11costs of sprawl." Using data gathered by William MacConnell and his associates for Massachusetts for 1950-1 and 1970-1, it is possible to get some idea of the extent of urban intrusions into rural landscapes. Figure 2-10'shows those towns in Massachusetts where less..than 10% Figure 2-10 EXPANSION OF URBAN IAND USE 114 MASSACHUSETTS, 1950' 1970 10 5 0 1.0 20 30 Miles towns With less than 10% of land in urban uses in 1950 and 1970 towns wi.th less than 10% of land in urban uses in 1950 but more than 10% in 1970 towns with more than 10% of land in urban uses -in 1950 and 1970 -.50- of the land was in urban uses in'1950-1 and where more than 10% of the land was in urban uses in 1970-1. Although this is but a rough indicator it suggests that urban uses of the land are dis- persing over the Massachusetts landscape. (Of course, one should not assume Massachusetts' experience holds for all parts of the country -- Massachusetts is a very urban state.) 4. Conclusions It is apparent that the consequences of the expansion of ur- ban development are different when viewed from the national, re- gional, and local perspectives. In contrast to the long term conversion,of,farmland as a proportion of potential cropland at the national level the dominant local issue is the change in the character of the landscape from rural to something neither rural nor urban as development disperses over the landscape. At the regional level, the severity of urban development varies spatially as seen in the Massachusetts and California examples. The threat of urbanization falls most heavily on agricultural land, and in California this may add to that.state's difficulties in maintain- its high level of agricultural production. B. Indirect Effects of Urbanization The expansion of urban development brings with it a variety of effects and influences which transcend the boundaries of the -51- developed land itself. These effects may be called indirect in .contrast to the direct conversion of land to urban uses. They -are characterized by their inducement of a change in.attitudes toward the future of land use in a particular locality by rural land owners in that locality. Rural nonfarm residents who live in the country because they, like low density rural living may find that increases in population change the visual and contemplative characteristics of the area to the point that it no longer appears rural to them. Some may be induced to move farther from this'ur- ban influence to regain a sylvan or agricultural surrounding. In some areas, forestry operations may be interferred with'by urban expansior; although there i.s probably more second home'speculation by forestry companies than indirect effects of urbanization inter- fering with foresters (see the discussion by Fellmeth for the California case). As a further example, the effects of land speculation have left a lasting mark upon the deserts of New Mexico.where speculators have bulldozed a grid pattern for future roads leaving strips of sand devoid of bunch grasses, sagebush, and other desert ve&atation and increasing the severity of dust storms. So far, only. a negligible portion.of this land has been built upon'or is likely to be built upon. But the rural activity which seems to fall most strongly within the sphere of urban in- fluence is ggriculture and the indirect effects 'of urbanization -52- upon farming will be the subject of much of the remainder of this chapter. 1. The Nature and Causes of Indirect Effects Increases in population in rural and semi-rural areas are the ultimate source of indirect effects. The pattern of these increases has shown a remarkable change in the past decade with the revival of growth in many counties which wereformerly losing population (Beale, and Beale and Fuguitt). Indeed in some states such as New York, Massachusetts, and Connecticut the population has been deconcentrating from metropolitan areas since the 1960's and for many more states such as Pennsylvania, Ohio, Georgia, California, Oregon, and several others, there has been a decon- centration of population since 1970 (Vining and Strauss). There are a number of forces at work behind population de- c.oncentration and rural revivals [Zelinsky et al., Beale]. One is that preferences for low density living have continued to attract people out of central cities into the suburbs and beyond; a second related force has been the extension of commuting fields because-of relatively cheap transportation and rising incomes. Third, some rural areas are now gaining population because retired individuals are moving back to their old home counties or to rural retirement communities in general. A fourth factor has been the -53- rapid growth of state colleges and universities in nonmetropolitan areas, which has of course attracted large numbers of students, faculty, staff, and other people. And a fifth factor has been the relocation and founding of manufacturing firms on the urban fringe, in rural areas,or in small cities which may attract workers in thoselfirms to live in nearby areas. The increases in population in rural and semi-rural areas often tend to bring with them,.three types of indirect effects which lead to un- certainty over the future,of that rural area in the minds of the rural residents. First the rural residents --,farmers and others begin to lose their political, economic, and social status in the community in which they live as they become outnumbered by people with different. economic, political,and social interests. One Hartford County, Connecticut farmer summarized the farm-nonfarm conflict in values by noting that "young people have no respect (for older farmers) -- moral decay is upon us." This decline in status leads to the second type of effect which may be called spillover effects of urbanization. Among these are: a. Regulation by suburban residents of farming (and perhaps other) activities that are deemed nuisances by'these new residents. For example, regulations on fertilizer use, manure disposali smells, slow-moving farm vehicles on commuter roads,, etc. are imposed so as-to'accommodate a -54,- suburb.an.lifestyle as opposed to a rural lifestyle. In addition existing ordinances are being extended to apply to farming in .urbanizing'areas; in Pocopson Township, Chester County, Pennsylvania, a long-standing provision limiting noise at night has recently been applied to farm activity. b. Increased taxation to pay for new schools, roads, utili- ties, and other services required by new suburban re- sidents. Farmers and other rural land owners often end up paying for these services on the basis of the amount of land they own or front footage rather than on the basis of how much they use the,services, C. Destruction of crops or equipment or harrassment of farm animals by nonfarm residents. Many urban-fringe farmers complain that they cannot leave farm equipment outdoors overnight for fear of vandalism and many also complain that tree crops are stolen or that children shoot arrows at their cows.requiring the installation of expensive fencing to keep people out. Referring to nonfarm youths, one.Howard County, Maryland farmer .remarked "It is hard to live with the (expletive deleted) ... I rented some land near Laurel and put in a corn crop. Now it's hard to, police all 600 acres at one time. I would come back to that field and f ind litter and motorbike trails and a lot of trampled ground." d. Use.of eminent,domain to acquire farmland and other rural land for public uses aimed at serving the growing non- rural population. Roads and reservoirs are two important categories of public use requiring the removal'of land from farms, sometimes even splitting farms into two mu.- tually inaccessible parts. -55- e. Air pollution damage to crops caused by.automobiles or industrial'activity or by residential space heating.@ This problem has been well publicized for the area around Los Angeles [Prestbo] but the extent of the prob- lem is difficult to ascertain. f. Disruption of farm infrastructure. While we have found no evidence that farm suppliers, assemblers of raw farm products, and other components of farm infrastructure have disappeared from urbanizing farm areas, we have found that farmers face increasing inconvenience as tra- ditional farm suppliers begin to accommodate suburban gardeners rather than commercial farmers. Farmers must travel farther than before to obtain machinery or repair services, for instance. Moreover, the urban northeast in general has experienced difficulty in obtaining spe- cialized farm machinery that is routinely shipped to. the major farming areas of the midwest and elsewhere. 9. Diminishing availability of farmland. Ac quisition and rental of farmland are difficult in much of thecountry -- many farmers, both older and younger,lare .in search of land to expand their farms or to start farming and the competition is intense, driving up land prices or rentals. In urbanizing areas there are the further dif- ficultites of 1) competing with nonfarmers for purchase of land and 2) the uncertainty created by the possibility that owners of land rented to farmers will not renew a lease when a speculative buyer or devel oper wants to purchase the land. -56- Farmers,have exhibited a differential ability to cope with these spillover effects generated by nearby urbanization. Some have the managerial ability and the willingness to accommodate .themselves to inconveniences created by urbanization. A Hartford County, Connecticut farmer whom we interviewed worked diligently at community relations and had established himself as a friend and employer of many local youths whom other farmers in the area regarded as quite mischievous. An older farmer in one Chester County, Pennsylvania family spoke of a changing lifestyle in general. He observed that the farmers in his area are no longer ignorant.dirt farmers, using intuition and a gambling spirit to succeed. Instead, the farmer today must become an expert in fi- nancial affairs, in new farm technology, in politics, and in community relations while stillkeeping a love for the land and putting in a 16 hour day when the work demands it. Because taking on a whole new set of problems created by ur- ban neighbors requires the farmer to be a businessman as well as a traditional skillful risk taker there has been a selective effect on farmers near urbanizing areas. Those farmers who cannot cope may tend to sell out faster to other farmers who can cope or to nonfarm6rs. A third indirect effect of urbanization is land speculation. The potential for rapid appreciation in land value as urban -57- pressures emerge in a ruralor semi-rural region.puts within ..sight the time-honored dream of reaping a windfall profit in the land.market. Such circumstances may transform the farmer or other land owner into an active speculator if the urban pressures are strong enough. Conklin and Dymsza have argued that such ac- tive speculation causes the farmer to disinvest in his farming operation. There is little need to keep up equipment, barns, soils, drainage,,fencing, or soil conservation procedures if. one is going.to sell out to a land speculator or developer in the near future. Thus.,farmers who feel that urban pressures .are strong will be led to idle.their farmland while waitinglar the speculator or developer to,come. Where urban pressures are weaker but not absent, many farmers and other rural land owners become passive speculators in their land. They hope to,realize a large capital gain in the value of their land when they retire, and this becomes an important component of their expectations about the future. The combination of declining status, spillover effects-from urbanization, and land speculation lead the rural land owner to. a change in his or her attitudes about the future.of-agriculture or the rural environment in the locality. There are strong and .strengthening pressures to force the farmer or other,land owner toward a feeling of the uncertainty,of that rural lifestyle -- -58- what the Blueprint Commission on..the Future of New Jersey Agri- culture called the impermanence syndrome. In the next section we shall examine the spatial expression of that syndrome giving special emphasis to the Middle Atlantic Region of the country. 2. Spatial Expression of Indirect Effects The indirect effects of urbanization upon the agricultural landscape vary with the strength of urban pressures. Where these pressures are strong we find a much more intense effect upon agriculture the idling of farmland. But where they are weaker, though still present, we find a slow-switchover from those types of agricultural activity requiring heavy, long"term investments to other agricultural activities for which the return on invest- ment is quicker and the investment not so heavy. Intense indirect effects, that is the idling of farmland, are fairly localized. They occur wher e population growth is strong and where there is already a substantial amount of land in farms, of course. When small extensions of develop- ment are scattered in relative isolation,these effects. will probably be weaker. To identify the extent of the potential for strong indirect effects (and concomitant direct effects) within a metropolitan area we examined six counties in the Philadelphia and Syracuse metropolitan areas for simple-evidence of the potential for con- -59- flicts between agriculture and urbanization at the town or township level. These counties were.am,ong the few for whichreliable land use data exist at the township level. After some experimentation, a potential for conflict between agriculture and urbanization was defined to exist if at least 20%, of land in,the township was in farms around 1970 and if the township had either.a) an increase in population density, 1960,-1970, of 100 persons per square mile (.156 persons per acre), or b) a population density of at least 640 persons per square.mile,(l person per acre) in 1970. The choice of these criteria for conflict are somewhat arbitrary, but changing them slightly alters the results only'slightly. The resulting maps for the counties in the Philadelphia,and Syracuse metropolitan areas (Figure 2-11) correspond to one's general impressions upon driving through the areas. The maps suggest that intense conflicts (both direct.and indirect) between agriculture and urbanization are -frequently localized within metro- politan counties. Looking in more detail,at the Philadelphia-metropolitan area, Berry estimated the amount.of land in farms in 1930 that was not developed Pr no longer being farmed in 1970; this is the amount of farmland that was permanently idled during 1930-1970. These estimates were made by township for six of the eight counties in the region Bucks, Chesterl and Delaware Counties in Pennsylvania and,Camden, Burlington, and Gloucester Counties in New Jersey. Table 2-11 Figure 2-11 TOWN8HIPS WITH POTENTIAL FOR CONFLICT BtTWEEN AGRICULTURE AND URBANIZATION IN 1970 A. Bucks and Chester Counties, PA. Burlington and Gloucester Counties, NJ. C@ 0 CO F 5 T Str,ong Potential for Conflict Limited Potential for Conflict 5 0 3. 10 15 .No d0to for Montgomery County; mo t a thef 1. b I arpoces "fop Feseot, %roas li.file or. no pro:eftf 0.9.ricu'lture- Figure 2-11, continued Strong potential for conflict: at least .B. Oswego and Onondaga 20% of land in farms and a) population Counties, NY density @!l person per acre, or b) change SWE0_ in population density 1960-1970 x!.16 persons per acre. Limited potential for conflict, at least .20% of land in farms, but population density and change in population density less than above. For Onondaga and Oswego Counties, land in farms ON refers to commercial farms only, that is, those with at least $10,000 of income.in 1972 in Oswego County and those with at least 2/3 of income from farming in Onondaga County. Sources: Philadelphia Region: Delaware Valley Regional Planning Commission; 1960 and 1970 Census of Population. Onondaga County: Syracuse-Onondaga County Planning Agency, Map of Commercial Farms in 1972; 1950 and 1970 Census of-Population. Oswego County: Oswego County Planning Board, Map of Commercial Farms in 1972; 1960 and 1970 Census of Poj2ulation. -62- Table 2-11 IDLING OF FARMLAND IN SIX COUNTIES IN THE PHILADELPHIA METROPOLITAN REGION,* 1930-1970 A. FARMLAND IDLED (Acres) .1970 Population Percent of Land in.Capabilit y Classes I and II Density'(persons ..per acre) 0-9.9 10-19.9 20-49.9 50 + Totals leIss than 1.0 60,897 38,711 89,375 46,668 235,652 1 or more 22@307 22,551 15,778 1,184 61X0 Totals 831,205 611262 105,153 47,851 297,472 B. PERCENT OF FARMLAND IDLED 19.710 Population Percent of Land in Capability Classes I and II Density (persons per acre) 0-9.9 -10-19.9 20-49.9 50 + Totals less than 1.0 35.1 31.2 26.4 22.6 28.0 or more 36.4 37.8 30.9 27.4 35.0 Totals 35.4 33.3 27.0 22.7 29.2 in-Bucks, Chester, Delaware, Calculated for 167 minor civil divisions Burlington, Camden, and Gloucester counties. Note: Acreages may not add.due to rounding. Source: Berry, 1976a. -63- reports these estimates of the idling of farmland for 167 townships in the study counties broken down by percent of the land in the town- ship in soil capability Classes I and II and by 1970 population density. It is apparent that much of the farmland that was idled during this period was idled because it was rather poor land and uncompet- itive in the agricultural marketplace. However, in the more densely populated areas much of the idling can be attributed,, at least in part, to pressures from urbanization. Assuming all of the idling of farmland.in townships where the 1970 population density was at least one person per acre was caused by urbanization, then 35% of the land in farms.was idled because of these urban pressures. It is probably true that urban pressures affecte*d some farmers' decisions in less densely populated areas as well'-- perhaps as much as.one third of all the farmland idled in the six counties could be attributed to urban pressures, some.100,000 acres. To estimate the magnitude of idling of farmland due to urban .pressures. in other parts of the country, we employed a two-step proced- ure. First, percent change in land in farms in various regions for the period 1959 to 1969, % LF, was regressed onthe change in the number of housing units per square mile between 1960 and 1970, HUDN; the percentage of non-federally owned non-urban land in, soilcapability Classes I and II in 1967, SCC 12; the percentage of farmers over 65 years of age in 1959, OLD; and the percentage -64- of farmers who earned a gross farm income of over $40,-000 per year in 1964, 40 + F. The unit of observation was the individual county and the universe was all such counties classified as metropolitan in 1970 (i.e., SMSA counties) which contained, significant agricul- tural activity. The most successful formulations were found for the metropolitan counties in the cash grain east and in the northeast- ern parts of the country. See Table 2-12. The regression equations provide estimates of theloss of farm- land due to direct and indirect urban causes (whichincludes the idling of farmland due to urbanization as well as the conversion of farmland to urban uses) while holding.constant some aspects of the. effects of soil quality, demographic features of the farming popula- tion, and economics of farming operations on the decline of land in farms. Thus, the coefficient of AHUDN estimates the decline in land in farms (as a percent of farmland in 1959) attributable to increases in residential development (expressed as.a density of net new housing units). 'I The metropolitan counties constituting the northeast are those in New York, New Jersey, Pennsylvania, eastern Ohio, Michigan, Wis- consin, and the Duluth, Minnesota SMSA. The metropolitan counties comprising the cas,h grain east region are those in .: central and western Ohio (excluding southwestern Ohio), Indiana (excluding the Louisville SMSA), the Evansville SMSA in Kentucky, Illinois, 'Missouri (excluding the Springfield SMSA)j Iowa, Minnesota (ex- cluding the Duluth and Fargo-Moorhead SMSAs), the Topeka SMSA, and the Nebraska and. Kansas parts of the Omaha and Kansas City SMSAs respectively. Table 2-12 CHANGE IN LAND IN FARMS: REGRESSION RESULTS FOR THE NORTHEAST AND CASH GRAIN EAST* .2 Region Constant AHUDN SCC12 OLD 40+F R. SEE N ,Northeast (metropolitan -22.030 -0.151 0.236 -0.454- 0.631 .58 6.77 @90 counties only) (6.51) (5.72) (1.81) (2.91). cash Grain East (metropolitan -9.384 -0,10.3 0.056 0 0.477 .48 6.21 87 counties only) (7.96), (2.02) (2.48) Cn Dependent variable is ALF, percent change in land in farms 1959-1969. Note: Numbers in parenthesis are ratios of coefficients to their standard errors; coeffi- cients are shown as b if this ratio is.less than 1.5.. -66- Using these regression equations we calculate'that about 0.51 acres of farmland were lost between 1959 and 1969 due to urbani- zation per housing unit built in.the average county in the cash grain east region; in the northeast this figure is 0.46 acres of farmland lost between 1959 and 1969 per housing unit built. The second step in estimating the idling of farmland due to urban pressures requires removing the effect of conversion of agricultural land from the regression results. We can accomplish this by subtracting from the total loss of farmland the estimates of conversions obtained,from the analysis,of thedirect effects of urbanization. The difference is an estimate of the acreage of farmland idled due to urban pressures. The result of these calculations shows the following for theaverage county in the cash grain east region and in the north- east region between 1959 and 1969: Cash Grain East Northeast Direct Effects acreage of farmland converted to urban uses per housing unit built 0.35 0.20 tndirect Effects ac.reage of farmland idled due to urban pressures per housing unit built 0.16 0.26 -67- Cash Grain East Northeast Indirect: Direct ratio of farmland idled due to urban pressures to farm- @land converted to urban uses 0.46 1.30 'Thust itis evident that a significa nt quantity of farmland is .being idled due.to pressures from urbanization but that this varies from region to region when expressed as a proportion of farmland converted to urban uses. The Philadelphia study reported above [Berry, 19761 indicated that about 120,000 acres of farmland were converted to urban uses, so the ratio of idling to conversion was around .625 to 0.833, slightly lower than for the average county. in the northeast region. In contrast to the localized idling of farmland caused b,y,ur- .ban pressures, changes in the type of farming attributable.to the declining status of farmers, urban spillover effects, and passive land speculation are much more widespread according to our analysis of changes in farming,activities between 1950 and 1974 in New Jersey, New York, and Pennsylvania [Berry, et al.]. For each of 18 different measures of farming activity in the 133 counties having significant agriculture in New York, New Jersey and Pennsylvania the relative percent changes in activity were calculated for the periods,1959 to 1969 and 1969 to 1974 using -68- Census of Agriculture data. 'The '18 measures of agricultural activity are: land in farms (acres) number of farms value of agricultural production* value of machinery chickens.ih inventory 3 months old and older (number) milk cows (number) cattle and calves other than-milk cows (number) hogs sold (number) corn for grain* (bushels) alfalfa* (dry tons) wheat (bushels) soybeans (bushels) Irish potatoes*. (cwt) vegetables* (acres) orchards and vineyards* (acres) nursery products* (acres) cut flowers under glass* (square feet) oats* (bushels) All figures are for farms with.sales over $2,500, except those denoted by * where the.1959 figures are forall farms; data are from the Census of Agriculture. The felative change between years 1 and 2 for activity X, in county is. i, R R X (X M 1)2 1 1)2 Where X is the quantity of agricultural'activity in year 2 in 2 ..County igX is the quantity of agricultural activityin year I in county i, and M1 2is 7: X23-/r X11where the sums are over all counties in the three state area. The relativo percent change for county i is R %R 1,2 100 which simplifies to 192 X i 1 X 2 7.R12 M1 100 X 12 -69- These percent changes are relative for each county in that they are expressed as deviations from the rate of change for the entire region for the appropriate time period and activity. The'relative changes in percentage form' for 'each county were .then tabulated by the following county population classes: 1. MetropolitanCounties a. Having a fast growth rate (10% or more) from 1960 to 1970 b. Having a slow growth rate (under 10%) from 1960 to 1970 2. Nonmetropolitan Counties a. Having a fast growth rate (10% or more) from 1960 to 1970 b. Having a slow growth rate (under 10%) from 1960 to 1970, Those changes in agricultural activity which vary in a sys- tematic way with county population characteristics can be iden- tified using the Kruskal-Wallis nonparametric analysis of variance. The activities that did exhibit such systematic variatiot.'(i.e., those for which the probability that the observed pattern of changes 'could have occurred by chance was less than 0.10) are shown in Table 2-13 along with the medians of the relative percent changes observed. Two major features of agricultural activity in these three states stand out in the analysis: 1) dairying and related ac- tivities are most sensitive to urbanization and population growth Tab le 2-13 MEDIAN RELATIVE SHIFT OF AGRICULTURAL COMPONENTS'CLASSIFIED BY POPULATION CHARACTERISTICS OF COUNTIES* NEW YORK, NEW JERSEY, AND PENNSYLVANIA (Percent) Metropolitan Nonmetropolitan Counties Counties component of Production Level of Rapidly Slowly Rapidly Slowly and Years Significance Growing Growing Growing Growing 1959-1969 Milk cows .000 -13.5 1.5 3.8 4.1 calves other Cattle 0 than'milk cows .070 9.3 0.1 4.1 0.0 Corn @for,:grain .010 -23.9 0.4 7.9 13.8 Alfalfa .001 -14.7 -11.9 -18.1 8.6 No. of farms .080 3.0 0.7 3.3 1.0 Value of Agric. Prod .060 9.7 1.6@ 2.7 3.2 1969-1974@ Milk cows .040 3.5' 2.5 6.1 2.6 Number of Counties 24 28 23 58 *@.Based on Kruskal-Wallis Analysis of Variance. Activities with statistically insignificant distributions notshown. _71- and are the kinds of activities which decline most consistently in metropolitan counties and rapidly growing nonmetropolitan ,counties. These are the only specific activities whose relative percent changes are statistically significant. 2) The sensi- tivity of various aspects of agricultural'production to urbaniza- tion and population growth over time is highly unstable. only the relative change in number of milk cows remains significantly related to population growth after 1969. The impermanence syndrome is probably the cause of.this Widespread pattern of decline.in dairying and related activities that includes.not only metropolitIan counties but also rapidly growing,nonmetropolitan counties. Dairying on a large commercial scale requires long term capital investments which, in an aura of uncertainty about the future of land use in metropolitan or rapid- ly growing nonmetropolitan counties, are not deemed prudent by farmers. There is little to be gained from making large invest- ments. in barns or equipment if one may sell out in a few years to someone who does not intend to use these capitai investments. Be- cause the dairy industry.is the major,component of.agriculture in the Middle Atlantic,@States,' its decline in urbanizing areas causes a relative decline in the,value of agricultural production as well., (It should be noted that the decline in milk cows in the 75 metropolitan and rapidly growing nonmetropolitan counties -72- between 1959 and 1974 was from 1,076,894 tows to 751,969-or from 51.5% of all milk cows in the region in 1959 to 48.4% of all milk cows in the region in 1974. This is a rather small percentage decline even though it shows a distinct spatial pattern.) That the relative change in number of farms is more negative in metropolitan or rapidly growing nonmetropolitan counties may be e.xplained by the impermanence syndrome also. Farmers who are less able to cope with new pressures, new community relations, etc. may tend to sell out,, and those farmers with the managerial ability to co n r ase or rent more land and en- ,pe,te d to stay and possibly pu ch ,large their farms. Thus, in metropolitan counties and rapidly grow- ing nonmetropolitan counties.farmers react selectively to'urban- in-duced pressures not present in more remote areas. And there may then be a,greater decline in the number of farms in counties subject to urbanization pressures. Between-1969 and 1974, those activities not requiring great in- vestments and long time horizons, such as growing corn or alfalfa, no longer showed a relative decline'in metropolitan and rapidly grow- ing nonmetropolitan counties in the Middle Atlantic States. Prob- ably this change was in response to rapid price changes. Thus, the rel4tive decline in some activities between 1959 and. 1969.was re- versed in the early 1970's.. Whether this will continue into the future depends not only upon continued profitability in field crops but the intensity of urban pressures as well. -73- It is remarkable that the relative percent change in land in farms shows no significant relationship with growth rate and metropolitan or nonmetropo.litan natures of the counties in the region. The probable explanation of this is that the proportion of farmland converted to urban uses over a five. or ten year period tends'to be rather small and that idling of farmland due to urban pressures is likely to be localized. Counties are sufficiently large so that.for most ofthem, conversion and idling effects appear as little more than,noise in the data. C. Conclusions The direct effects of urbanization, the conversion of land to urban uses, generally account for only a sma'll pe'rcenta ge of all land tn the United States or in any major region of the country. However, there has been a noticeable bias for urban development to take place in areas where the best soils are located in the Midwest, in lowland parts of the northeast and in the valleys Of California, for example. Moreover, over a long period, such as fifty years, the conversion process may remove sufficient agricultural land from production so that it will-be expensive to bring an equivalent acreage of high quality replacement land into production; to,offset this loss of the ability to provide food and fiber for world demand there is no guarantee of future increased -74- yields per acre under less favorable climatic conditions than were experienced over the past thirty or forty years. Froma local perspective, the most notable feature about the pattern of urbanization is its great dispersal throughout the typical metropolitan region. This noncompact configuration of development alters the appearance of the landscape rather drastically and may strengthen the indirect effects of urbaniza- tion. Indirect effects of urbanization result in changes in farmers' attitudes toward the future of agriculture in regions affected by urban pressures. At the source of these changes in attitudes are the increase in urban, suburban, or exurban-popul ations, concomitant declines in the political, economic, and social status of farmers, spillover effects generated by urbanization, and land speculation. These forces combine to produce localized idling of .otherwise productive farmland in areas subject to strong urban pressures and a widespread slow switch-over to types of agricul- tural activity requiring shorter term investments and more rapid returns on investment where these urban pressures are weaker. The interrelationships among urbanization pre.ssures and di..,- rect and indirect@effects upon the agricultural landscape are depicted in Figure 2-12. The.Figure also reminds us that not all Figure 2-12 FARMERS' RESPONSES TO URBANIZATION IN THE CONTEXT OF OTHER EXOGENOUS FORCES AND CONSTRAINTS EXOGENOUS-FORCES SPILLOVER CHANGES IN CHANCES IN LANDSCAPE AND CONSTRAINTS EFFECTS FARMERS' ATTITUDES AND FARMING ACTIVITY jLarge portio version of lat--@4 -nd Urbanizatibn and Regulation of farming Con d of la population Increased taxation to urban uses decent ra Pollution damage split offsl Destruction of crops Etc. T Em,@nent Changes 3.n crop and livestcck domain SYNDROME pntterns tctive@ IMPERM,ANENCE idling of relatively prodt t t farmland Speculation in land Disinvestment in farms --j Discouragement of younger I a Soil characteristics ri armer Land surface form Climatic variation Chinge in farmers' status, pe Differential ability to c Etc. --Kg-.1and politics ti-n 'National patterns- agricultural act7ivfi-,y@@! Price changes Changes in crop and livestock. Cost changes patterns Retirement of relatively Changes in demand for unproductive farmland 0 C: agricultural products Changes in farm size 0 r firming onto U Expansion ol. W Interregional shift in previously unfarme6 land infrastructure R?gulation of agricultu7;@ Taxation Land ownership patterns Etc. 0 03 -76- changes in agricultural activities can be attributed to urbaniza- tion as we shall see in the next chapter. ,Chapter III FORCES AND INSTITUTIONS INFLUENCING LAND USE The expansion of urbanization and the processes of wider, pop ulation decentralization take place in the context of a land .market and within legal and political constraints on the use, conversion,, and exchange of land. Intervention in the operation of theland market is a major characteristic of some types of land use controls: this intervention may attempt to limit the types of uses to which particular parcels of land may be put or it may attempt to provide incentives to actors in the land market to alter the pattern of conversion of land from rural to urban uses. To understand the potential effectiveness of land use con-, trols, then, requires an understanding of how the land market works and what types of constraints upon its operation are in force and what types of constraints are typically disallowed by the courts and popular attitudes. Changes in rural landscapes do not occur solely because of urbanization pressures, of course. The viability of agriculture and other rural activities is going to affect the use of the land and is furthermore,going to influence the effectiveness of in- centives to farmers and others to keep their land in rural uses and will influence legal and popular attitudes toward constraints on the use of the land. Thus, it is important to examine@the -77- -78- factors which contribute to the viability of agriculture; as before, there is too little information available to allow us to study the viability of other'types of rural activities that are strongly affected by urban pressures. A. The Land Market The most influential set of factors affecting the conversion of land from rural to urban uses consists of those inherent in the land market. It is here that demands for conversion of land are translated in-to actions by rural land' owners, speculators, developers, and builders. And it is also here that land use measures aimed at controlling the development processes must operate. Where and how they intervene in or influence the market will be criticalin determining their success in saving farmland and open space. Thus, it is essential that we have an overview of the land market as it typically operates on the rural-urban fringe in order to understand and evaluate methods of land use control in relation to it. This brief review focuses on five components of the rural- urban fringe market: the actors in the land market, the demand for land by nonrural users., the availability of land, market Afi'economic analysis of forest industries, a topic that has bee .n widely studied, would lead us too far afield, since the forest industry does not appear to be under great pressure from urban development. -79- processes, and the price paid for lan.d. These are sketched in a simplified manner in Figure 3-1. This discussion is highly generalized based upon work by others. Empirical analyses of the land market other than'purely.economic ones are unfortunately quite rare and so what follows is a distillation of studies primarily by real estate experts and economic theorists. 1. Actors in the Land Market Actors in the land market may be categorized as rural land owners (e.g., farmers), speculators, developers and builders, government agencies, and savings banks and others who lend mort- gage money. In some cases, these actors are not separate indi- viduals but one person playing various roles. For instance, some farmers are not only initial land owners in the process of conver- sion of rural land to urban uses but also speculators. Or some developers and builders also act as land speculators. We shall take the rural landowner to be the initial owner of landthat may be sold to a developer, builder, speculator, or farmer. He may be a farmer, forest landowner, or a.rural resident who works elsewhere. In the most outlying areas where the process of land c-onver- sion has not begun, land is typically owned by farmers, lumber companies or mining companies who use the land for traditional rural economic purposes. In areas where development pressure has Figure 3-1 A SIMPLIFIED MODEL OF THE LAND MARKET.OF THE RURAL-URBANFRINGE Economic@ Social3l Characteristics Actors and and Demographic of Land, Market.Processes Characteristics and processes jAgri. econ. sit Relative Rural land owners) -@Iprodu,ctivity Push factors leverage, [Age of land owner etc. eminent Pull fInheritance taxes domain factor: price IDesire for changel offered Prices [spillov Government Spec lat of agencies land Rate of household infra- regulation liens, Iformation structure etc. encumbrances, 00 etc. [Migratio@n r------- 1 Suitability for 1 Preference for 1development, Deve opers rs 1homesites Demand for land uil Iaccessibility, and uilders) lincome levels etc - - - - - - - - - Industrial growth, el"Savings-banks decline and relocation @etc. Economic, Social, and Demographic Actors in the Land Market Characteristics and Processes r-- - - n . ICharacteristics of Land J -81- begun it is not uncommon to find that many of the original land- owners have been bought out by speculators or developers who are holding the land with the intention of ultimate development. Ty- pically, they will rent farmland to farmers who may continue to farm it right up until the time that development actually begins. The land speculator, in the abstract, is someone deciding where to invest his money to make the greatest return [Shoup]. He could put it in the bank or in some alternative scheme (including land speculation in another l.ocality) that earned a rate of return, r. If the rate of appreciation of the development value of the' land (g) minus the tax rate (t) on the land he holds in speculation falls below r, he will attempt to sell the land or will not. buy the land if looking for an investment property. In symbols, he holds or would like to hold the land as long as-(g..@t)' r. Although this. is a skeletal view of the speculator..there are some,,similaritie,s among farmers, professional investors, small time speculators, and anyone else involved in land speculation. First, all of them could put their money into some other venture, but the expected rate of appreciation in the value of land in an- ticipation of future urban development has attracted them all farmers begin disinvesting in their farms and watch the value of their land appreciate (i.e., the rate of appreciation minus taxes exceeds the rate of return in farming); professional investors may -82- have a variety.,of choices open to them but choose a particular parcel of land because its rate ofappreciation minus taxes exceeds tthe rate of return in other feasible investments; the small rural landowner may also simply be sitting.on a piece of land waiting for a chance@to sell as its value appreciates. Second, all spe- culators are working in an aura of uncertainty and their specula- tion entails risks. There is no guarantee that a buyer can be found for the land at the price they would like to sell it for or that the land will even be developed. Land developers are "entrepreneur(s) engaged in the activity .,of converting tracts of open land into improved ... subdivisions wherein the finished lots are ready for ... building activities to take place." (Kenney, p. 14)., Builders are those who construct houses, apartments, commercial facilities,, industrial buildings, etc. Often developers and builders may be the same firm or may work jointly if they are two or more separate firms. Government agencies are leading actors in the land market. State and Federal agencies purchase land for highways, dams, and reservoirs, outdoor recreation facilities,, and so on. Local and, to a lesser extent, state governments influence the land market through their choices as to where to locate infrastructure such as sewers, water lines, electrical service,, schools, roads, etc. They also regulate private builders and'developers'by accepting, modifying, or rejecting proposed land uses. And in their pur- -83- chases of land governments tend to set price levels for private sales. Hence, despite the oft-@usedterm lithe free market" the land market is certainly not free from government influence. In- deed government influence extends to judicial protection of the landowner's right to make money'from the use, exchange or conv .er- sion of his land as we shall see later. The final actor we shall consider is the set of lending,in- stitutions which provide mortgage money for land or building pur- chases or land development or construction. In addition to private banking institutions, Federal agencies which guarantee or make loans are important members of this set, particularly in,farming areas. The real estate market is particularly sensitive to the availability of mortgage money and the interest rates atwhich money can be obtained. As a result, construction a ctivity tends to vary cyclically with the state of the national (and regional) economy. In the figure, we have shown the lending institutions as primarily influencing the prospective ultimate land user such as the homeowner. If he is unable to obtain mortgage money at affordable rates, then he may well be excluded from the market processes. Institutions such as insurance companies are also instrum ental in land speculation via their investments or participation in Real Estate Investment Trusts and the like., .-84- 2.'. The Demand for Land The demand for land which.even.tually results in the conver- sion of--spme@rural land for urban uses can be characterized at- levels:. regional and site-specific.. Regional levels of.de- mand for land depend upon rates of household formation, migration levels,, income levels, and general patterns of national and re- gional economic growth and decline. As noted above, the demand for land for development purposes is strongly linked to the busi- ness cycle. At the site-specific level of analysis demand for land varies according to preferences for amenities such as good views, high quality school districts, and accessi bility to roads and public transportation. When translating these regional and site-specif i.c demands for land conversion into the conversion of specific parcels of land, it is necessary to take into account the characteristics of the parcels: the location of publc infra- structure, accessibility to major roads and public transportation, eiigineering characteristics of the soil, and availability of various services and amenities. Hence, the demand for land can be thought of as both a general regional variable and a set of site-specific variables which differ across the regional landscape. Knowing these demands, though, does not impart anyone with perfect foresight as to which land will be developed. There is generally sufficient space to accommodate urban growth in the foreseeable f uture and the _85- potential to create urban amenities and accessibility as needed. This leads us to consider the availability of land for development in more detail. 3. The Availability_of Land In order for land conversion to take place, it is necessary to have not only a demand for land but a supply of land as well. Thi,s supply ultimately originates in the rural landowners such as the farmer. His decision to put his land up for sale depends upon both push and pull factors.. The rural landowner may be pushed into the decision to sell his land to a speculator or developer by any of the following types of situations: a. A poor economic return from-the land,. High co sts rela- tive to the prices.he receives from farming or forestry, for example, may push a landowner into selling. Farming is a particularly volatile.occupation as far as annual net income is concerned, and so the variable of interest here is the average net return over a fairly long time horizon and not just over one or two years, which may be unusually good or bad. Land that is relatively unproduc- tive is unlikely to find many farmers orforesters as potential buyerswhereas highly Productive land rarely lacks.for.a potential farm or forest buyer. b. Advanced age. Rural landowners usually consider selling their land when they approach retirement age. This par- ticular demographic push factor wust eventual ly affect every rural landowner, unlike the other types of factors, so even though it may be unimportant to a particular land- -86- owner at one time in his life, it will, over the long run, be an extremely important factor in the conversion of land to urban uses. c. The desire for a change of lifestyle... Some rural land- owners may wish for an urban lifestyle or for work in manufa.cturing, services, or trade. This'has historically been an important reason,for the large emigration from rural to urban areas, and although it,has largely.run its .course it has not stopped altogether. Currently, there is a partially offsetting force at work in the desire of many people, both old and young, to live in rural or semi- rural areas. d. Spillover effects from urban areas. As discussed in the previous chapter, there are a number of spillovers from nearby urban areas, such as higher property taxes or re- gulation of agricultural activities that are nuisances to the farmer or to the landowner who enjoys living in a rural area. These may be thought of as push factors in discouraging rural landowners to retain their land. e. Inheritance taxes. Traditionally, state and Federal in- heritance taxes have been regarded as a push factor in the sale of rural land. To meet these tax obligations it may be necessary for the heirs to sell all or part of a farm or other rural property, thereby possibly allowing speculators or developers to acquire the land. These push factors do not necessarily operate independently from each other. Rural landowners may not,feel pushedAnto selling their land-until several factors come into play simultaneously. At the same time, they may also feel pulled into selling their -87- land by high prices offered by speculators or developers. A price hundreds or thousands of dollars per acre higher than its current use value can, look very tempting to someone, especially when the push factors are already making him.think about selling his land. 4. Market Processes The land market does not operate simply in terms of demands for and availability of land. There are processes and institutions which are instrumental to.the functioning of the land market on the rural-urban fringe. We can only mention a few of the more prominent processes and instituti ons. The discussion to follow is based prin- cipally on the work of Lindeman. I The first point to make is that the flow of land ownership from rural landowner through speculator'to developer and.builder is not as simple as depicted in Figure 3-1. Rather, there are often a series-of speculative owners. Sometimes the speculator does not in- tend to hold onto the land long enough to pay off his financial ob- ligations to the previous owner. Instead he will sell the land to another speculator, and any unpaidnotes on the original mortgage will be passed on to the new speculator. Early speculators in this process often are more sophisticated in that they are able to'take advantage of higher appreciation rates and'are able to.make more advantageous deals.. Thus one speculator may buy from another spe- culator (rather than from a farmer) and sell to another speculator 1We have been able to observe many of the events discussed by Lindeman in our statistical analysis of land prices in New Jersey. These events were not systematically studied, but they are reported in the Appendix. -88- (rather than to a developer). Generally speaking, the active speculator also likes to be able to purchase as much rapidly appreciating land as he can'so as to increase the volume of his returns. This implies that he would like to extend the purchasing power of his own money by spending someone else's money as well through various borrowing schemes. That is, he desires to have "leverage:' in which he makes as small a down payment on the land as possible and puts off as long as possible making any payments on interest or principal borrowed so that he can acquire more land with his initial funds. He anticipates that when he sells the land to another speculator or to a,developer he will receive enough cash or notes to pay off whatever interest and principal remain outstanding. In his attempts to get leverage he may obtain a mortgage from the previous owner of the land (a purchase money mortgage) rather than from a bank. In addition, so as to put off large .immediate payments for interest or principal, he will pay a higher nominal price for the land in return for lower interest payments and a deferred payment schedule, the payments on the principal not being made until a few years later. Thus, the recorded sales prices of land are often overstated with respect to the actual present vaiue of the anticipated development value of the land. -89- Another type of sale is called a sales contract or equity build-up sale. In this case, the seller'retains use of the land until the buyer has paid a specified proportion of the principal such as 25%. Then the deed is transferred to the buyer, and the seller relinquishes use of the land. The buyer does not pay any interest during the equity build-up period of the deal, which may be five years,and so may pay a higher price at the very be- ginning of the deal to obtain these terms. These kinds of financial arrangements and sales to other speculators before the mortgages are paid off can encumber the title to a particular parcel of land. Lindeman argues that the financial obligations of the various speculatorst and web of liens, release clauses, subordination clauses'. and exculpatory clauses may make land unusable from the developer's or builder's point of view. It is far too risky and imprudent to attempt to acquire land with so many complicated obligations if one is in the business of building houses, for example. When land prices are no longer appreciating and when buyers for properties are impossible to find., the speculative market may collapse, and then-the financial obligations incurred by specu- lators may cascade into A tangle of legal conditions and possibly a series of defaulted payments that cloud the title to the land. _90- Tax laws also influence the market processes. Sellers of land may want a downpayment less than 30% of the sales price so as to spread,out their income tax payments over the years when the installment payments are received rather than having to pay taxes on the revenue from sale of the land in one lump sum. 5. The Price of Land The various supply and demand related forces at work in the land market ultimately result in transactions at certain prices. Regularities in these prices of land are often associated with a variety of parcel Attributes; accessibility, acreage, soil characteristics, and the like. [Adams, Milgram, Crean, and Mansfield; Clonts; Coughlin-and Fritz; Crowley' Harris and Allee; And Hushak, for example.] Determining the behavior of these prices is an important component of this study for it allows one- to estimate the costs of public purchase of development rights on land or the costs falling upon landowners whose land is re- stricted from further development. There are some general sta- tistical methodologies one can apply to make such estimates and the.se are described in detail in the Appendix and applied to transactions of large undeveloped parcels in New Jersey. One would, of.course, expect that although there may be regularities in the price of land with regard to parcel attributes that these would vary from place to place and from time to time as far as _91- actual dollar impacts on,the price are concerned. A summary of some of the results from the statistical analysis of transactions in New Jersey (for the period 1972 to 1976 and only for parcels 10 acres or larger) are presented in Figures 3-2 and 3-3 and in Table 3-1. Broadly speaking, parcels with buildings command a higher price per acre than parcels without buildings, as one would expect. In addition, larger par- eels tend to sell for less per acre than smaller ones, and par- eels in more urban counties,such as Burlington;and to some extent Warren,tend.to sell for more than comparable ones in more rural counties,such as Cumberland and Salem. With regard to.the effect of time.on price, we see that prices tended to increase between 1972 and 1.975 with some decline after 1975. These trends are very rough as depicted in Figures 3-2 and 3-3. There are numerous forces 'at work on each transaction .(in- eluding random ones) that must be taken into account to make improved predictions of land prices. For any one parceltime trends may offset the effects of size or other attributes or may reinforce them. For example, Table 3-1 isolates some of these effects for sales in Bur lington County for the years 1972 to 1976. The full details of these calculations can be found in the' Appendix. From the table we can see the dollar effect of soil quality, road frontage, distance to Philadelphia,and other parcel and sale -92- Figure 3-2 5. AVERAGE PRICE OF PARCELS SOLD IN FIVE 4. 1976 NEW JERSEY COUNTIES 1972 !3- BY SIZE OF PARCEL 2. Paterson Warren Jaisey City I . New York City News r k 5. 0 Allentown Elizabe%th Hunlerdon 4- 3- 4" 2. 3. Trarriton 2. Philadelphi Ca n Bur, I ington Salem 5- e., 0 _j Vi eland 4. Atlantic City Cumberland 3. C, 0 - KEY 0 o 4- 0 3- 2. W 0 Parcels witri buildings Parcels without buildings SOURCE: 9*mPle comoil*d by authors--see Aopendix -93- Figure 3-3 AVERAGE PRICE PER ACRE OF PARCELS SOLD IN FIVE NEW JERSEY COUNTIES. 1972 -.1976 BY YEAR SOLD $3000" Burlington 4J Hunterdon @4 2000- Warren parcels 10 acres or more with buildings 14 .1000- Cumberland and Salem -44 14 1972 73 74 75 76 Year $3000- Burlington Warren 2000- ........... parcels 10 acres or more -,,Hunterdon without buildings @4 Cd @4 1000- Cumberland and ..Sal6m 1972 73 74 75 76 Year Burlin \Burling @ d'" t2 .@u@be@rland ar Pgt 0@ Warren . . ......... SOURCE: Sample compiled by authors see Appendix. -94- Table 3-1 INCREMENT IN-THE PRICE OF LAND WHEN A PARCEL HAS CERTAIN ATTRIBUTES, BURLINGTON COUNTY, NEW JERSEY* Increment in Price of Parcel Assuming No Other Attributes are Changed .Attribute of Parcel ($/Acre) Assessed value.of buildings on parcel (written as deviation $1.59 per dollar of assessed from mean assessed value) value of buildings** Parcel includes soil in SCS if yes, $2,140 Classes I or II (yes or no) if no, $0 Percent of soil in Parcel in $27.30 for each percentage SCS Classes I or II point Road frontage on minor roads $53.30 for every front foot per acre of land (written as on a minor road per acre of deviation from sample mean) land Distance from Philadelphia $156 per mile Attribute of Sale Buyer-seller relationship if neither buyer nor seller is a corporation or part.- nership: - $763 if either or both are cor- portations or partnership: $0 Based on 139 transactions between 1972 and 1976. The fact that this is greater than $1.00 indicates that build- ings are assessed at less than true market value. Source: Calculated by authors: see Appendix. -95- attributes on sales prices in this particular case. For example, if the assessed value of buildings on a parcel were $1,000 more than the mean assessed value, the price of the parcel would in- crease by $1,590 per acre. Or if the parcel had 20% of its soil, in SCS Classes I and II, its value would increase by $2,140 per acre plus $546 per acre for a total increase of $2,682 per acre over its price if it did not have soils in SCS Classes I and'II. These estimates of land prices are intended for illustrative purposes at this point. We shall have occasion to return to them in our discussion of the cost of land use controls. They have a further purpose as weLl though. They are the results of ^several alternative statistical analyses of land prices, the methodologies of which may be useful to state or regional planners who must make estimates of the costs of a land control program and have need of a useful approach to obtain estimates. A detailed discussion of methodology is contained in the Appendix. @B. Attitudes of the Courts One of;the most important institutions determining the use of the land is the judicial system: in particular, the courtsi attitudes toward land as private property and the dimunution of the value of land caused by governmental regulation of land use. These attitudes quite naturally affect the applicability of a variety of types of land use controls. -96- ..With a few notable exceptions (and an increasing number in the past few years) the courts have, it the last fifty years, vigorously upheld the concept that great diminution of the ex- change value of land caused by governmental regulations is unconstitutional. The argument has been based on several different concepts. The classical interpretation (from Oliver Wendell Holmes' 1922 opinion in the Case of Pennsylvania Coal Company vs. Mahon, et al., 260 Us 393) is that if the diminution in the value of property is too great, then the regulation is tantamount to a taking of private property for public use without just compensa- tion, which is clearly unconstitutional according to the Fifth Amendment. "The general.rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking" (260 US at 415). One need not make unconstitutiontal argument based upon the Fifth Amendment,:however. If the diminution of property value caused by government regulation "frustrates" the private property owner in the use of his property the regulation may be-interpreted as an illegitimate use of the power to regulate. (See the opinion by Justice Breitel in the case of Fred F. French Investing Co. vs City nf New York, 350 NE 2d 381). In either view, there is little agreement on what constitutes a sufficient diminution in exchange value so that private property -97- can be regarded as having been taken without just compensation. There are no hard and fast rules -- each case must be decided upon its merits and balanced between public benefits and private costs. As one might imagine,'there is a great variation in how much dimi- nution in value must occur before private property has been "taken or before a landowner has been frustrated in the use of his property. A somewhat different view, and a minor Iity outlook, is that as long as regulation protects an existing public benefit, such as the aesthetics of the natural landscape, while allowing the owner a foreasonable" return on his property, then the diminution question is irrelevant. It is irrelevant because the diminution-in value is based upon a potential value generated by future development of the property, and is not a current'use value. However, should the govern- ment wish to create a new benefit such as a park that would not permit the landowner a "reasonable" return from his property then the government action is equivalent to a taking without compensation. This view is expressed by Bosselman, Callies, and Banta and reflects the stance taken by the Wisconsin Supreme Court in Jus.t V. Marinette County (201 NW 2d 761). 'The Justs\argue their property has been severely depreciated in valuei. But this depreciation of value was not based on the use of the land in its natural,state but on what the land would be worth ,if it could be filled and used for,the location of a dwelling. "While loss of value is to be construed in determining whether a re- striction is a constructive taking, value based on,changing the character of the land at the expense of harm to public,rights is not an essential factor or controlling torl.." f a c (2.01 _NW 2d 711). See also the discussion by Large. -98- C. Popular Attitudes People's suspicions of land use controls have played a dominant role in the characteristics of the types of restrictions thataxe placed on the operation of the land market. In their discussion of the taking issue, Bosselman, Callies, and Banta brought up the interesting point that many minor civil divisions do not use zoning approaches to protect environmentally valuable lands not because the courts in factalways find these programs un- constitutional but rather because they think that the courts will. Richard Babcock's account of zoningis replete with examples of fears that either a) zoning,, if introduced, will bring with it all sorts of undesirable government interference in private matters, or b) development, if not controlled by zoning, will bring with it all sorts:of evils such as motels, nonconforming uses, and unde.sirable individuals. It all depends on the point of view. Even though there are recognizable benefits to land use con- trols, when it comes down to the private individual worrying about the control's effect on him personally and on his.community, there is frequently opposition. For example, an attempt to persuade people to adopt a plan based on public purchase of development rights (i.e., conservation easements) along the Upper East Branch of the Brandywine in suburban Philadelphia ten years ago, failed in large part because the idea of giving up (even for money) onels _99- traditional rights in property was unthinkable, possibly even a Co unist plot [Strong 19751. An even stronger deterrent to the use of some controls is the'decline or potential decline in pro- perty values that land use controls may impose upon some landowners. Passing an innovative town zoning ordinance is no easy matter, especially when the exact implications of each phrase in the ordi- nance are not fully understood by the few citizens feeling strongly. enough to attend public hearings. In Sunderland, Massachusetts, it took three attempts to pass a zoning bylaw which drew opposition from people because of its restriction on commercial and apartment development, because of the potential of diminshed property values, and because its transferable development rights provisions were in- comprehensible to some citizens [Gowen and Mackenzie]. A major in- strument in its eventual passage was the diffusion of.correct information to the public by means of a clear written explanation of the bylaw posted throughout the town and distributed at the public hearing. Upsetting the status quo with land use controls changes the rules of the land market game for all parties and, regardless of the benefits of the controls, these rule changes may be costly and require new thinking patterns. Thus one can understand.why some farmers and other rural landowners in New York State feared the creation of agricultural districts including their land. _100- There is sufficient misunderstanding of the restrictions imposed upon land owners in an agricultural district that the Executive Director of the Agricultural Resources Commission must make fre- .quent trips around the state to explain.exactly how the program works. Speculators, developers, and builders often turn to liti- gation to react to the changed rules caused by land use controls. In sum, then, one must deal with the conser- vatism inherent in the population in general. Merely because there are plainly visible benefits to a land use control program does not mean one can overlook the private costs, whether real or imagined, ec-onom,ic or noneconomic. -Overcoming the fear of controlling land use and upsetting-the status quo is not im- possible, as the innovative land use controls to be discussed in the next chapter testify, but the road to effective control of land uses (if such a road even exists) is strewn with the pre- judices of past practices and attitudes. D. Viability of Agriculture Although the direct and indirect effects of urbanization cause something between 1 and 2 millionacres of farmland to be lost every year, there are other forces and constraints at work which cause An additional 3 to 4 million acres of farmland to go out of production each year. These net changes, including those -4 by region caused by urbanization,, are summarized in Figure 3 of the United.State.s. The dynamics of agriculture as a commercial en terprise must be taken.into account, then, if we are to consider the effects of controls on land use to retain land in.farms,in the sphere.of urban influences. Where agriculture is not a.viable, economic activity.then land use controls to protect it from ur- banizatton will not be successful in keeping the land in farms. In this section we shall examine several,aspects.of agriculture which contribute to its'viability, including ph nstraints, y,sical co price and cost changes., and interregional shifts in infrastructure. A note of caution:. farmers are famous for dwelling on tales of hardship (as well as for their own personal optimism in with- .Standing bad.w.eather, low prices, and the like). The fact that American agriculture is still quite productive would indicate that The regions in Figure 3"4 are defined as follows: New England Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island Middle Atlantic -- New York, New-Jersey, and Pennsylvania East North Central Ohio, Indiana, Illinois, Michigan, and Wisconsin West North Central Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska,-and Kansas South Atlantic -- Delaware, Maryland, Virginia, West Virginia,. North Carolina, South Carolina,.Georgia, and Florida East South Central Alabama, Mississippi, Tennessee, and Kentucky West South Central Arkansas, Louisiana, Texas and Oklahoma Mountain -- New Mexico,@ Arizona, Colorado, Utah, Nevada, Wyoming, Idaho and Montana Pacific California, Oregon, Washington, Alaska, and Hawaii -102- Figure 3-4 FARMING BY REGION 1959 -1974 A. PERCENT OF VALUE OF U.S. FARM PRODUCTION BY REGION, 1959-1974 30.0 WNC NE - New England 34 04 MA - Middle Atlantic ENC - East North Central 0 20. 44 SA - South Atlantic ESC - East South Central i'-WSC - West South Central 44 7@% WSC 0 10- @@SA WNC - West North Central r4 Mtn - Mountain ESC Pac - Pacific 44 11A 0 1959 1964 1969 1974 B. LAND IN FARMS BY REGION 1959 and 1974 Ln r- ON all r-4 r-4 14 300" 44 7 0 U. S. Totals (acres) 0 1959 = 977$275,507 44 200- r4 P4 1974 = 901 079,338 U 1000 cc PL4 U) V4, Z farms with sales over $2500 only. Source: Census of Agriculture. -103- in'total things are.not as bad as the individual instances in the following sections might imply. Allan Grant, President of the American Farm Bureau Federation, tells the following story. A city man went to visit his,farmer friend on spring and remarked how well the-prospects, for a good year seemed. The farmer replied that he had only just planted his corn and that a late freeze could wipe him out. Several weeks later the friend came back and .noted that the corn was@growing well and that it looked like a bumper'crop. However,the farmer@replied, there might be too ,much rain or too little rain and the crop would fail. Finally, in the fall, the friend came back and saw the farmer harvesting his best crop to date. When he reminded the farmer of his ear'lier good predictions, the farmer responded by saying "You'd be sur- prised what a good crop like that can do to the soil.11 1. PhysicalConstraints Broadly speaking, the two most important physica'l constraints on the viability of agriculture are soil quality and climatic conditions., During the twentieth century, American*agriculture has undergone a significant technological revolution, three com- ponents of which were 1) the invention of tractors, combines, and other powered machines with the subsequent retirement of horses as work animals, 2) the introduction of new hybrid plants, genetic improvements in livestock, and new fertilizers and pesticides, -104- and 3) improved transportation allowing some.agricultural ac- tivities to be located further from their markets. As agricul- tural innovations were adopted throughout the country, it was apparent that many areap with poorer s oils and hillier terrain simply could not compete economically with the commercia I farms of the Midwest, Great Pllainsl and California [Clawson, 1972, Hart, 1968, Higbee, and Statfeld]. Capital intensive farming plus the difficulty of farming commercially on poorer land pushed thousands of younger men off the farms into the cities. As a conseq uence, a large relic population of older farmers on less productive land has characterized the twentieth century. Even in areas where urban pressures are strong, much of the loss of land in farms has been due more to -the retirement of marginal farmland than to intense direct and indirect effects from urbani- kation [Hart,@1968 and Berry, 1976A]. Climatic conditions for agriculture have been generally favorable over the past forty years with notable exceptions of regional droughts and floods [Schneider]. However, as Schneider argues, this was an unusually favorable period,and greater cli- matic variability and general cooling may force more restrictive constraints oi! farming in the more arid and colder parts of the nation. This,then seems to be a possible cause for future interregional shifts in agricultural activity away from the west -105- -back to!. the -humid urban east.. Prices and Costs The viability of agriculture is also dependent upon the prices farmers. receive and the costs they pay. Recent trends in prices and costs are shown.in Figure 3-5; in the 1960's, prices and costs rose very slowly, but in the early 1970's they jumped drastically, reflecting generalinflation and sudden increases in.petroleum prices,and, it world demand.forfood and fiber products. In net, 1973 and 1974 were unusually good for the average farmer (U.S. De- partm.ent of Agriculture, Agricultural Statistics, 1975), and crop- land that was. previously idled in many localities was brought, back into production to take advantage.of high prices for soybeans, corn, and othercommodities. 3. Shifts in Infrastructure Part of the dynamics oflagriculture is the relocation of farm infrastructure of dealers who sell inputs to farmers, assemblers of.farm products, and some food processors.. Farmers must be able to buy machinery and other inputs, obtain repair services, and sell their output to wholesalers or processors on a regular basis. Thus, these activities are essential to the production.of food and fiber in the United States', and the proximity to farmin&ofa great many specific types of infrastructure is necessary for farming to prosper in a particular region. Figure 3-5 INDEX OF PRICES PAID BY FARMERS AND PRICES RECEIVED BY FARMERS FOR ALL FARM PRODUCTS 300- 250-. 200- P 150- 3 100- 50- 0 F 1955 1960 1965 1970 1975 Year 1. interest payable per acre. 2. prices paid for all commodities for use in farm.production and family maintenance plus interest, taxes, and wages for hired farm labor. 3. prices paid for all commodities for use in farm production. 4. prices received by farmers. Sources: USDA, Agricultural Statistics, 1975. USDA, Agricultural Prices, Dec. 1976. _107- Interregional shifts in,the location of form infrastructure cancause major problems with farm production in those areas.. which.are declining. For example,,SeaUrook Farms, Minot.Foods,: and R3*tter,have all closed, their doors in South Jersey in the last three years. These food processors have departed New Jersey for a combination of reasons high labor costs, utility costs, taxes, and possibly pollution control.regulations. As a result, South Jersey vegetable farmers have lost a large portion of their market and are left with supermarket chains as the principal buyers of,their vegetables. However, this has proved to be an unsatisfactory substitute,.as,some local supermarkets buy fresh market vegetables elsewhere on a year-roun.d,basis instead of from local producers on a seasonal basis. 'These kinds conomic changes have their he of e impact, upon,t individual farmer. One South Jersey farmer interviewed spoke of a neighbor who purchased $15,000 worth of new string-bean ma- chinery. Then the only string-bean processor in the area,closed down and he was left with expensive machinery that could not be easily sold off. Eventually he went bankrupt. There is,great reluctance, especially for older farmers, to learn new types of farming in the absence of a large market for vegetables in the area: itis expensive and requires costly learning by doing.. -108- Changes in relative concentration of infrastructure over the period from the late 1950's to the late 1960's can be seen in Figure 3-6. Data on farm infrastructure are hard to obtain at the regional level,but it is possible to present location quotients for wholesale assemblers of farm products and, the food processing industry. The location quotients show the concentration of a given type of infrastructure in the region in relation to the region's proportion of the nation's farm output. 1 The de- finitions are given in the figures. A location quotient of 1.0 ind,icates,that the infrastructure occurs in the region in pro- portion to the region's farm output, a quotient of more than 1.0 indicates that the infrastructure is*concentrated there, and a. quotient of less than 1.0 indicates that the infrastructure in the region exists at a lower level than onewould expect, on the basis of the region's farm output. The figures show that up to 1968 food processing was con- centrating in New England and the Middle Atlantic Region and was declining in concentration in the East North Central, West North Central, and Middle Atlantic Regions. Assemblers of farm products were becoming more concentrated in New England and in the West The data.are from the 1958 and 1967 Census of Manufactures, the 1958 and 1967 Census of Wholesaling, and the 1959 and 1969 Census of Agriculture. Figure 3-6 REGIONAL CONCENTRATION OF SOME FARMINFRASTRUCTUREJ, 1958.,AND@ 1968, Assemblers of Farm Products Processers of Food. and Kindred Product 0 4" 4 (SIC 20), MA- 3- oo3 00 NE r-4 CY 01 2- 2- ENG* I WNC SA Pace OENC ac SA :jMA WSC WSC Mtn ESC Mtn *WNC 1 2 3 4 1 2 3 4 LQ 1958 LQ 1958 LQ=A/B LQ=C/B wher6.A= Sales of assemblers in region where C= Employment in SIC 20 in region Sales of assemblers in nation Employment in SIC,20 in,nation P I B= Value of farm output,in region B@ Value of farm output in region Value of farm output in nation 17a-lue of farm output in nation- -110- and East North Central States. 4. Other Forces and Constraints One of the newest constraints on farming is the introduction of environmental regulations on pesticide use% fertilizer use, and manure disposal. These kinds of regulations are often imposed at the State or Federal level so they are not the direct result of nearby urbanization. Farmers interviewed in New Jersey are frequently aggravated.over the inconvenience in acquiring pesti- cidelicensing -- they must apply in person and attend the'ob- ligatory training sessions which are supposed to demonstrate safe methods -for handling potent pesticides.. Many feel that they have the professional competence to learn the methods effectively on their own without the condescending supervision of the government. To take a second example, in the last few years "... nearly every major agricultural state has moved to tighten its regulations on feedlots and to ensure that feedlot ponds can handle heavy rains. In some cases, these regulations have proven expensive for farmers." [Prestbo, p. 2051. The availability of land to expand farm operations and to -take-advantage of economies of scale has proven to be a major problem to many farmers. An Illinois farmer noted that "if a fellow dies, his neighbors,are bidding on his place before-he has time to cool off" (quoted in Prestbo, p. 14). Higher farmland prices even in remote-rural areas reflect,this intense compe- tition for high quality farmland (U.S. Department of Agriculture, "Farm Real Estate Market DevelopmeInts," March 1977). Obtaining nearby land to expand one's farm is, however, quite. difficult and, noncontiguous tracts of farmland are quite common [Smith and Sublett]. There are',of cours e, numerous other factors which-influence the viability of farming in a given region. However, we have covered those which.figure most prominently in the potential success or future of programs designed to retain farmland on the rural-urban fringe,and so the-discussion need not be continued. -112- Chapter IV THE NATURE OF LAND USE CONTROLS A. Mechanics of Land Use Controls The many proposals to protect agricultural and environmentally :valuable.lands, and the fewerprograms actually implemented, place reliance on a variety of land use control methods. In order to begin our discussion of the effectiveness of the various controls, ,the controls in question first must be identified and described., It is most.convdnient to classify the controls as either direct .those controls which are applied to specific parcels of land with the purpose of putting restrictions on possible uses of the par- cel,-- or indirect those controls which provide economic or other-incentives to farmers or other rural land owners in order to encourage them to remain in an approved.land use, or which add to the costs of development in order to discourage it. The controls to be analyzed are listed in Table 4-1, classi- fied by direct and indirect and further grouped by the method they use to achieve their objectives. Direct controls rely on purchase of rights in land or regulation. Indirect controls make use of tax expenditures, tax penalttes, or specific protections. This section, which presents generic descriptions of the various typeswill be followed by a section which will report specific ex- periences with the use of each of them. -113- Table 4-1 A CLASSIFICATION OF LAND USE CONTROLS A. Direct Controls- Purchase of Fee or Lesser Interest in Land Direct Purchase,of Development Rights Purchase and.Sale with Restrictions Purchase and Lease with Restrictions Exercise of Right,to Preempt Regulation (Police Power) Exclusive Farm or Rural Use Zoning Inverse Condemnation Development Permit. Systems Regulation Combined with Exchange of Development Rights- Transfer of Development Rights. B. Indirect.Controls Tax Expenditure's Differential Assessment for Property Tax Differential Valuation for Federal Estate Tax Valuation Differential Valuation for State Inheritance Tax Valuation Tax Penalties Capital. Gains Tax Protection-from Urban Effects Agricultural Districting -114- 1. Direct Controls a. Acquisition of Development Rights Public purchase of development rights directly protects 'farmland and other open space by removing the right to develop specific parcels of land and compensating the owner fully for the diminution in the market exchange value of the land as a result of the restrictions placed on it. The restrictions can be written to preclude any development at all, or to permit limited develop- ment which is consistent with goals of maintaining farming, pre- serving scenic views, or protecting environmentally sensitive areas. They can also be written to forbid changes to the landscape such as dumping, earth moving, or cutting of certain trees. Once the development rights easement has been sold, the owner still retains the other rights of use and exchange normally in- herent in ownership. Unless a right-of-way easement (e.g., hunt- ing, fishing, or hiking easement) is purchased he retains the right to fence or otherwise prevent the public from entering his land. The owner also retains the responsibility of paying taxes on the land, which must be assessed giving consideration to the rights which have been removed. Essentially, there are three procedures by which the develop- metkt rights maybe acquired: 5 i. Direct Purchase of"Development Rights. Development rights may be acquired directly by purchasing a development rights easement ,(row I of Tabl'e 4-2). Development rights easements are also referred to as scenic, conservation, or development easements. Easements which allow the holder of the easement (in this case the public) to use the land for some purpose (such as hiking or fishing by the general public or the right of entry for inspection by government officials) are called positive or affirmative. easements. If the easement simply prevents the landowner from doing something with his land (such as develop- ing it) it is called a negative easement. Most development easements are primarily negative, butmay include positive.provisions. Easements are also classified as appurtenarit or in gross. For an easement,to be appurtenant, the owner of the easement must also own some adjoining land in fee simple; this land held in fee is benefitted by theeasement. An easement is classified as in gross if the holder of the easement does not own land adjacent to the land under easement. An appurtenant easement can always be transferred to a future owner of the fee; but, depending on local statutes and court interpretations, it may not be possible to transfer an easement in gross. Therefore, mostagencies that are active in acquiring easements recommend that a small part of the land be acquired in fee simple Table 4-2 SUMKARY DESCRIPTIONS OF LAND USE CONTROLS Type DIRECT CONTROLS Purchase of Fee or Lesser Interest in Land General Description Typical Variations 1. Direct purchase of De- A development rights easement is pur- Sale of development rights mandatory velopment Rights chased. Owner is paid difference be- or voluntary; purchase may depend on tween market value and value based on minimum percentate of area being permitted uses; owner surrenders right offered for sale of development rights. to develop, as specified in easement. Price of easement set by appraisal, not by market. 2. Purchase and subsequent Fee is purchased at market value. Use Sale of feecould be mandatory or sale with restrictions restrictions attached to deed; pro- voluntary. Resale price (and therefore perty then sold. net price to'p,ublic) could be set by market, or by Administrative formula. 3. Purchase and subsequent Same as 2, except that property is Same as 2, except that property leased lease with restrictions leased rather than sold. rather than sold. 4. Exercise of right to pre- Owner must inform government of intent empt to sell. Government has right of first refusal. Government can then buy and resell. or lease with restric- tions. Regulatory Methods Exclusive farm or rural Zoning forbids any development incom- May specify large.(20-80 ac) minimum use zoning patible with farming or rural uses in lot size in addition to specific uses the ioning district. permitted or forbidden. 2. Inverse condemnation Government imposes regulation on use of land; owner given specified time to file claim for compensation based on establishment that regulation consti- tutes a taking. 3. Transfer of development Developers in the growth zones may 1. transfer restricted to adjacent par- rights purchase development rights from land- cels, to parcels in one ownership, or owners in the no-growth zone. to any parcels within political jurisdiction. 2. development rights certificates issued to owners of parcels in no- growth zone, developers.simply pur- chase developmeat rights easements from owners of parcels in no-growth zone. 3. government supports market or else lets private market set values. Table 4-2 -,continued Type General Description Typical VariationIs, 4. Development permit Specified types of development@ in Permit granting agency organized at systems specified areas must receive a per- state, regional or local level. mit from government. Permit may be subject.to conditions. INDIRECT CONTROLS Tax Incentives 1. Differential assessment Eligible land is assessed at use Under pure preferential Assessment for property taxes value rather than at market exchange participation usually automatic and value. there Are no saacrions on changing use. w- o. Under deferred taxation, o-iers convert to ineligible land use payback several years tax savings, usually i th interest. Under restrictive agree- ments, participating owner contracts not to develop for given.number of years. Deferred taxation and restrictive agree- ments usually voluntary. 2. Differential-valuation Eligible land is assessed at use value Minimum number of years in farming -to for Federal estate and rather than at market exchange value. be eligible. Sanctions in form of pay- state inheritance taxes back of portion of tax saving if.change use within given time period. Tax Penalties 1. Capital gains tax High tax rate on capital gains from Tax rate decreases by number of years land sales. held,,increases by percent capital gain. Protection from Urbah Effects 1. Agricultural Distri cting Limitations on power of:,local govern- various combinations of specific limi- ment to regulate farming practices, tations., utilities to Impose assessments, state or local government to locate urban infrastructure. -118- so that the easement can be considered appurtenant (Brenneman). ii. Purchase of Fee and Subsequent Resale with Restrictions. Alternatively, (row 2) the public could first purchase the land, impose development restricti ons on it comparable to the restrictions of a development rights easement, and then sell the land back to the original owner or to another party. The net result of this procedure is equivalent to that of purchasing the rights directly. In both cases, the restrictions on development would "run with the land," that is, would become a part of the deed and be binding on all future owners. iii. Purchase of Fee and Subsequent Lease with Restrictions. Purchase and lease with restrictions is similar to purch ase and sale with restrictions, except that the public retains title to the land and leases it to a private lessee. The resale and lease prices may be set directly by the market through competitive bidding. In contrast, the price paid when purchasing a developments right easement directly must be determined through appraisals. Typically, any of these methods of removing the development ,rights from the bundle of rights held by the landowner would be exercised over a specific geographic area which might be defined generically (as for example all Class I and II land or all wet- lands) or simply delineated on a map (agricultural preservation area A. environmental protection area B, etc.). The public might decide _119- on a mandatory program in-which rights on all of the designated lands would-be purchased, or a voluntary program-in.whic.h rights wouldbe purchased only from those owner s who offered them.for sale., Under a voluntary program, the.governIment might purchase .rights only if it received reasonable offers on a given minimum .percent of,the designated.land. otherwise, the protected area might be so broken u land that the la' .p by unprotected nd use objectives could not be achieved. .It may not be necessary to.acquire development rights on all designated properties at thelbeginning of the program. For ex- ample, as long as a private landowner wishes. to keep his land in its presen.t..rural..uses, there is no immediate need for. the public to ac- quire the development rights. The New Jersey Blueprint program Would give owners the option of selling their development rights at any time over a period,of 20-Years. The owner could thus decide whether he would be better off by taking his cash payment early or waiting until A later date when the cash value would be See New Jersey Blueprint Commission Report. -120- higher due to the appreciation of.-the land market. The following method provides another procedure for scheduling the purchase of development rights. iv. Ekercise of the Right of Preemption. Under this method, when any parcel of a designated type (e.g., "prime" farmland) comes on the market, the government may (as is done in France) substitute itself for whoever has made an offer for the land.' Then it may purchase and resell or lease with restrictions. The public purchases only those properties which, in fact, come on the market, at the time they come on the marketY and if the proposed purchaser would convert the land to an unacceptable use. Thus, the total number of purchases is likely to be less than under the first two methods'. and the purchases are likely to be.somewhat spread out over time rather than occurring all at the beginning of the program period. Although there is no formal program based on its use in the United States, preemption is a power compatible with the American legal system andAmerican values. There is ample precedent for it in the private market's use of the right of first refusal. b. Regulatory Methods other direct methods of protecting farmland and environ- mentally valuable lands are based on the "police power," that is, the power to regulate. _121- i. Exclusive Farm or Rural Use Zoning. Exclusive farm or -rural use zoning is the most straightforward example of the regulatory approach. Under it, very stringent zoning restrictions, are imposed ona class of land,s.which are delineated on the zoning ,map. Certain limited uses-such as farms and farm-related dwellings are permitted by right;,.certain.other uses, such as single family dwellings unrelated to farming, may be permitted.as special ex- ceptions if approval is obtained from the governing body. Other uses can be made only if a variance is obtained.or if the zonin 9 is changed. Exclusive farm or rural.use zoning differs from,the. mare familiar zoning only in that the permitte, d uses are, much more limited and much larger minimum lot sizes (e.g., 20-80.acres minimum),may be mandated. Zoning is normally imposed by local (county or municipal) levels of government. State policy may be injected by establish- ing p1anning.and zoning guidelines which must be followed by local governments. No compensation to offset the restrictions is paid to the landowners., ii. Inverse Condemnation. Invetse,condemn-ation is a hybrid. Restrictions on development are placed on specified land and the landowners given a stated time within which to petiti.on.the court that the regulation is an unreasonable use of the police power because it is equivalent to a taking without -122- compensation. If the court agressz either compe(n Ipc @-t@on must be paid to the landowner and an easement acquired, 'or,:the:tes@trictions must be revised 'or removed. Thus, although the restrictions are based on the power of the government to regulate, the possibility is held out that compensation is due the landowner because of the sever ity of the restrictions on development. iii. Transfer of Development Rights. Transfer of develop- ment rights (TDR) also combines the concept of zoning with. compIensation to owners of restricted lands. The compensation, in this case, comes from developers who wish to build on less.restricted land rather than from the government (although the-government acting As developer also could purchase rights). TDR was first developed to protect urban landmarks, I but its application to the preservation of farmland, habitats of ecological value, landscapes of aesthetic value, and the like has been widely discussed. Transfer of development rights schemes have many different forms, but generally have two basic components. First, environ- mentally valuable land inside the planning jurisdiction (it would most likely be a township or county) is delimited on a .map and See "the Chicago Plan" worked out by Costonis and Shlaes. -123- zoned for little or no further development. This demarcation of a boundary is presumably based'ofi,@-aesthetic, ecological, ag- ricultural, or other environmental arguments such as sensitivity of the land to development (e.g,., s"teep slopes or aquifer'recharge areas) or the presence of hazards to development (e.g., floods in floodplains). Other land in the planning jurisdiction is zoned for further develop ment.1 The second component of a TDR plan involves the inducement mechanism for transferring,development rights from the no-growth zone to the growth zone. The idea is that the developmentrights are separated 'from the land in the no-growth'zone and are made available for purchase and attachment to land in the growth zone. This,process of transferring the development rights from the no- growth zone to the growth zone is the most remarkable feature . of TDR programs. Land in the growth zone is zoned for development at a rela- tively low density. But if a developer wishes to exceed'this.low density constraint he can do so (up to a limit) by purchasing," transferable development rights from land owners in the no-growth The'most detailed explanation of the demarcation of a no-growth zone is that of South Brunswick Township in Middlesex County, New Jersey (Nieswand, et @11.). The TDR.study for Sonoma County is shorter on the details of delimiting the no-growth zones but a map is.included in the report by Sedway/Cooke. -124- zone. Presumably, he would do so if the new higher densities in the growth zone.allowed him.greater economic surplus from which he could bid for transferable development rights. In this way, development rights are transferred to the growth zone from the no -growth zone,and landowners in the no-growth zone can still re- ceive payment for their development rights even though their land cannot be developed much, if at all. Once the development rights are sold, development rights certificates attached to the deed of the land in the,no-growth zone are cancelled so they cannot be used again. Obviously, one of the most important aspects of this second component is the initial assignment of transferable development rights to landowners in the no-growth zone. This can be accomplished iii a number of ways. They might simply be distributed on the basis of acreage owned, in proporti.on to assessed value of the land 2 or appraised value of the land, in proportion to..the assessed or appraised development.value only of the land (that is, on the market value minus current use value),3according to the develop- For example, as in Buckingham Township, Bucks County, Pa. 2 As in the South Brunswick Demonstration Project by Nieswand, et al. 3 The proposed New Jersey enabling legislation, the 1975 '@-Iunicipal Development Rights Act," Assembly Bill'No. 3192 specifies the difference in assessed value before and after the TDR program. _125- .ability of each acre as determined by soil and other conditions, according to current (i.e., pre-TDR) zoning, or by some other method. Allocating transferable development rights in proportion to the appraised value of the development rights (before the TDR Program) is probably the most.generally applicable approach, in thatit is directly concerned with the diminution of the exchange value of the land caused by preservation of the landscape. It is also necessary to define how much each transferable development right allows a builder to increase the density of his development. The certificate which he purchases to increase the density of the development may allow him so many more square feet of floorspace per acre or so many more dwelling units@per acre, or som ething of that nature. Whatever approach is used the Units mu st be clearly defined.1 iv. 2evelopment Permit Systems. Under development permit systems specified types of development must receive a per- mit from the government, in'addition to the usual zoning and build- ing permits. A special commission may be set up to review Applications for development and to determine whether or not to grant a permit. A detailed discussion of one approach can be found in Nieswand, et al., Demonstration Project for South Brunswick Township. -126- Granting of a permit is usually based on criteria of suitability of land for development and permits'frequently incorporate con- ditions to restrict development which conflicts with the criteria. Thus, development permit systems allow flexibility in dealing with the specifics of each proposal in a framework of general criteria. 2. Indirect Controls Indirect controls are intended to encourage an owner to main- tain his land in farming or some other open use. They do not put any direct restrictions on the use of a property. Rather they consist of tax or other kinds of incentives and disincentives. a. Tax Incentives Differential assessment for purposes of property tax, Federal estate tax, and State inheritance tax provides a positive incentive to refrain from development. The capital gains tax-on la nd provides a negative incentive. i. Differential Assessment for Property Tax. Differential assessment laws are usually categorized as falling into one of three categories: Preferential assessment, deferred taxation, and restrictive agreement (Hady and Sibold; Keene, et_2.1.). Pre- ferential assessment laws produce an abatement of taxes authorizing or requiring assessors to assess eligible land on t he _127- bas1s of farm forest or open a 'space v.lue, rather than on mar ket value., which in many location8.is,much higher because of the demand for developable sites. Deferred taxation laws add an additional feature by imposing a sanction requiring owners of land who convert land to non-eligible uses to pay some or all the taxes which they were excused from paying for a number of years prior to conversion. Restrictive agreement laws include both preferential assessment and,, in all states except Vermont, a sanction in the form,of a payment of back taxes. In addition, they require the owner to sign a contract spelling out his rights and duties. In California, for instance, he must wait'.until the end of a 10 year run-.out.period (or pay for, breach.of contract) after signifying his intention of nonrenewal beforehe can convert the land to noneligible uses as of right. There are three factors relating to the land market and the. real property tax system in a par.ticular landowner's taxing juris- diction which influence the magnitude of the tax benefits he might receive from differential assessment (Keenee't al.): a. the difference between the assessed value of the land based on fair market value and its assessed value based on current-use value. obviously, eligible landowners at the rural-urban fringe would, in'principle, enjoy the largest reduction,-although the fact, that de facto pre- erential assessment of open land is widespread in these -128- areas may, in practice, reduce the"magnitude of the benefit. In such areas, however, differential assessment would protect the landowner against future increases in tax burden resulting from rising land values and reassess- ment. b. the percentage which the assessed value of eligible land and associated real estate improvements, such as barns, is of the total assessed value tax base before the establish- ment of differential assessment. If all realty in the .taxing jurisdiction is in the,e-ligible use, there would be no benefit to an individual landowner. The assessed value of his land would be reduced, but, since the tax revenue needs of the municipality would remain the same, the tax rate would go up by an amount sufficient to pro- duce the same tax revenue, and his tax bill would remain unchanged. At th .e otherextreme, if there is a'very small amount of eligible'land in a jurisdiction, the tax saving for its owner would be proportional to the. reduction in assessment. C. the percentage which the improvements on a particular eligible property are of its total assessed value before differential assessment. The tax benefit usually involves onlytaxes on land, and improvements continue-to-beassessed' at fair market value. In general, if an cwner is to be better off after the institution of a differential assessment program, the [email protected] of his.pr-op- erty's value which is in eligible land must be larger than the percent of the entire tax base which is in eligible land. Thus, not all eligible landowners will enjoy a net benefit -129- from a,differenti.al assessment program. Those with a high pro- .portion of improv*ment value to land value may seetheir tax, .bills rise, even though their land is assessed at a lower rate. ii. Differential,Valuation for Estate-,-and Inheritance Taxation. Farming is a capital-intensive industry, with much of a farmer's capital tied up in land.. Land value., therefore, contributes heavily to estate and inheritance taxes, even in rural districts. In areas experiencing urban pressure, the market value of the land increases far.out of proportion to its economic worth to the agricultural process. Estate and inheritance taxes are correspondingly inflated. Farmers have complained for years ofthis heavy tax burden. In response to their appeals, the Tax Reform Act of 1976 included two provisions designed to encourage preservation of family farms following the owner s death. These relate't.o the valuation of farmland based on farm use and a substantial relaxation in the time by which the Federal estate tax must be paid. Several states have enacted somewhat similar provisions,and more appear to be following their example. Federal Estate Tax The overall intention of the tax provision in the Tax Refom 2003, 2004. The description given in this report is intended as a general explanation. The individual property owner should not let it substitute for a careful reading of the relevant sections of the Act and interpretation by an expert in tax law. -130- Act of 1976 is to benefit heirs of small family farms. Therefore, current use valuation is restricted to a maximum of $500,000 of real property (valued at current use.), and current use, va.luation can be applied only to land which had been actively farmed by the decedent for at leas.t five of,.-the-eight years-preceding his death and which passed to a nearby relative.. The provisions apply only to farmland and buildings, not to farm machinery or fixtures. More specifically, the eligibility requirements state that at least 50,percent of the decedent's gross estate (valued at fair market and after deduction for mortgages and other debts) must consist of real or personal property which was being used as a farm and was passed to a qualified heir. Jn addition, at least 25% of the gross estate must consist of real property (that is, not including personal property) that was owned and actively farmed by the decedent or a member of his family for at least five of the eight years preceding his death. Use value is to be computed by a specified formula requiring data on rental of comparable lands: (gross cash rental) - (state and local pro- Farm use value perty taxes) Annual effective interest rate for new Federal loans -If.rental data on comparable farmlands are not available, or if the executor elects, the valuation may be based on capitalization -131- of income, capitalization of fair rental value, the assessed. farm use value as used for.differential assessment, comparable sales of farmland in the same geographic area, or t1any other fac- tor which fairly values thelfarm. A-11 or part of the tax saving must be repaid, if, within 15 years.of the decedent's death, the heir disposes of the pro- 'perty.or uses it for other than qualified farm use.for a total of three or more years within any sub-period of.eight years. The-amount of tax saving to be repaid is computed to the nearest. month, but can.be summarized as follows: Number of Years from, Decedent's Death to Percent,Tax Saving Re- Disqualification captured by Government 10 or less 1.00 11 80 12 60 13 40 14 15 0 ..,Property for.which the Federal estate tax was based on use valuation is subject to a lien for recapture of the estate tax until the end.of the 15-year recapture period@or the death of the qualified heir. The second important provision of the Tax Reform Act of 1916 makes it possible,to extend to 15 years the time for paying estate taxes on farm real estate. In addition, only interest on the tax 132 need be paid within the first fiveyears',, and interest on the tax attributable to the first $1,000,000 of farm value is reduced to four percent.' The remainder is subject to normal interest rates. The time extension and the lowinterest rate apply only if farm' realty constituted at least 65% of the value of the decedent's ad- justed gross estate,I another provision designed to limit benefits to bona-fide small farmers. b. Tax Disincentives i. Capital Gains Tax on Land Sales. The major purpose of a capital gains tax on land sales is to discourage speculation and premature subdivision activity. Therefore, the tax rate im- posed is usually very high (over 50%) for land held for a. short period. However, in order to relieve long@-term holder s of land, the tax rate may decline with the number of years the land is held. The tax rate may also increase with increases in the percent gain realized by the seller. The capital gain is defined as the difference between the cost basis (the amount originally paid for the land by the present .owner plus certain allowable expenses) and the selling price (gross consideration minus selling expenses). This is comparable .1-Gross estate minus deductions for expenses, debts, taxes, and losses'. -133- .to the definition in the Fe'deral Internal Revenue Code of.any capital gain. Theoretically, a-tax on land should reduce subdivision ac- tivity. In Figure 4-1 the price of landbefore the tax (P and quantity exchanged (Ql) is determined by the "supply" of land made available by rural landholders to speculators and de- velopers (S and the demand for land for urban uses (D). Figure 4-1. S 2 S 4-4 P2 -0 P P3 - - @4 D 02 Q1 Quantity Exchanged It should be noted 'that even though the total stock of land is fixed, the "supply"'of land to speculators and- developers-is not. This is because at higher prices, more and more land wilI be offered for urbandevelopment. -134- A tax on land will increase its price to the buyer and thus, will shift the supply curve upwards (to S 2). The tax will not affect the demand for land since this is derived from the consumer's demand for housing and the commercial and industrial demand for floorspace. The amount of the tax that is shifted forward to the buyer depends on the elasticity of supply of land to urban uses. The more elastic (flat) the "supply" curve is, the more tax is shifted to the buyer. In out figure,, the after-tax price of land increases to P2 __ of this P3 goes to the seller of the land (down from P I before) and P P is the tax. Also note that the tax has reduced 2 3 the amount of land exchanged (from Q, to Q2) Generally, the more elastic the "supply" of land to urban useg, the greater will be the effect of the tax inreducing the amount of,subdivision activity. So far, this theoretical explanation of the land gains tax has been static in nature, and. has ignored the effect of the tax on the allocation of land between rural and urban uses over time. Some observers have argued that land speculation has resulted in the withholding of fringe land from urban development and thus led to high land prices and a pattern of leap-frog development. In ,theory, a land gains tax would tend to discourage long-term in- vestment in land. In terms of Figure 4-1, the imposition of a capital gains tax on land would lead to a once-and-for-all shift in the "supply" curve to the right as land investors put their holdings on the market. 'This would lead to a more efficient pattern of land use and.lower land prices. Protection from Urban Effects i. Agricultural Districting. Agriculturaldistricting consists of designating geographic areas for long-term farming and instituting in the districts a combination of measures de- signed to offset the spillover effects of urbanization which make it difficult to continue farming. The measures include limitations on the powers of local government to regulate farming practices which may be offensive to suburbanites because of smells, dust, noise, etc.; limitations on the powers of state and county governments to locate roads, sewers5 water mains, public instutions, and other urban infra- structure in or near an agricultural district; limitations on the power of utilities to assess farmers in a district on a front- foot basis for utility lines which run through or along their property. Other measures . designed to of f set the ef f ects of spe- .culation in land prices or other effects of urbanization may be included in an agricultural districting package. In.this study, however, we define agricultural districting as excluding differen- tial assessment for property taxation and differential valuation for Federal estate and state inheritance tax purposes, since these -136- measures are treated separately.. The designation of the boundaries of an agricultural.district may be based on soil quality, current use for agriculture, and the commitment of existing farmers to remaining in farming. A minimum allowable size for a district may also be stipulated. Chapter V EXPERIENCE WITH LAND USE CONTROLS I A, Experience with Direct Controls .1@ Experience with Acquisition of DevelopmentRights Many individual development rights easements (conversion ease- ments, scenic easements, etc.) have been donated or sold by private, owners.to national or local conservation trusts. There are very few examples, however, of government programs to acquire easements over extensive areas in order to protect scenery, environmentally valuable areas, or agricultural lands. To the extent that govern- ment programs for ac.quisition of development rights have been in- stituted in this country, simple,purchase has been the usual approach. Three such programs have been.examined carefully as part of this research.project: the Wisconsin scenic easement program, the Suffolk County Agricultural Land Preservation Program, and the New Jersey Farmland Demonstration Project. No purchase-and-sale- with- restrictions programs are known, but purchase and lease back has been undertaken on a limited scale in Massachusetts and extensively in Saskatchewan, Canada. a. Direct acquisition of development rights i. The Wisconsin scenic easement program. In 1939 a joint commission of ten states proposed a A more complete treatment of most of the cases reported in this chapter may be found in working papers prepared as part of this research project. They are: _137- -138- Mississippi Parkway or Great River Road along the length of the Mississippi River from Minnesota to the Gulf of Mexico. Following the recommendations of a 1951 study, Wisconsin began to purchase easements 1 (footnote continued from previous page) John E. Pickett, "The Wisconsin Scenic Easement Program." John E. Pickett, "The Suffolk County Farmland Preservation Program." John E. Pickett, "The New Jersey Farmland Preservation Program." Kathleen Wallace, "Purchase and Leaseback of Agricultural Land in Massachusetts Towns." Ann L.. Strong, "Preemption and Farmland Preservation: The French Experience." Ernest Leonardo, "A Survey of Exclusive Agricultural Zoning in the United States." Robert E. Coughlin, "The Oregon Land Use Act." Kathleen Wallace, "The Massachusetts Wetlands Program of Inverse Condemnation." David.Berry, "Economic and Legal Issues Inherent in the Transfer of Development Rights." Ann L. Strong, "Vermont's Act 250 and Prime Farmland." Ann L. Strong, "Estate Taxation of Farmland Under the Tax Reform Act of 1976." Thomas Plaut,, "A Capital Gains Tax on Land as a Technique for Preserving Farmland: A Brief Look at the Vermont Land Gains Tax. David Berry, "Participation in New York's Agricultural Districting Program." a long. the G-j@eat@ River Road in order to.preserve continued rural uses compatible with the parkwayls scenic objectives. In'1961, thestate legislatureextended aut 1. horization to'allow purchase of Scenic easements along routes -fronting other major rivers and'lakes. By 1975, easements had been purchased on 1,751 parcels, amounting to.17,375 acres along 290.miles of highway. As initially applied along the Great River Road, easements Iwere acquired to 'a depth-of 350 feet from the highway center-. linei Within the easement areas, farming was permitted; resi- dential development on lots less than 5 acres was prohibited; signs and billboards were prohibited; and existing non-conforming uses, both residential and commercial, were permitted to remain. No affirmative rights were conveyed to the state. After several years experience with the program, the 5-acre requirement for single.family residential development was changed to a minimum frontage of 300 feet, based on a safe spacing of driveway entrances. Subsequently the.re,gulations were changedagain to encourage c.luster development of large tracts. The 350-foot depth criterion was also modified to, permit the depth of.e.asements t-o vary accord.ing,.to the toppgra- phy. In addition, the state now acquires affirmative rights to enter easement areas for inspection, correction of violations, and cutting, pruning, and planting of trees. Since the typical type of "development" in the study area consisted of single-family -140- houses on very large lots, generally the primary restriction .of a 300-foot frontage requirement has removed relatively little development potential from the typical landowner. In order to appraise the value of the easements, specially trained state personnel are used,and 90% of all easements are negotiated amicably. Undoubtedly, the threat of condemnation has an influence on the high amicable settlement rate, but despite a favorable court ruling, 1 the Highway Commission is reluctant to condemn easements. If condemnation becomes necessary,_the Commis- sion prefers,to condemn the property in fee simple, since enforce- ment of the easement restriction is believed to be difficult without the landowner Is cooperation. To dealwith possible.conflicts between perpetual easements and changing conditions, the Highway Commission has developed a system of permanent and temporary variances in return for grants of additional rights which, on balance, further the Kamrowski vs. State (31 Wisc. 2nd 256, 142 NW 2d 793).Kamrowski .contended that public enjoyment of scenic beauty did not con- stitute a public use for which eminent domain could be exercised. The court rejected this argument and held that the legislature, in passing the program had determined that protection of scenic resources was in fact a public purpose; that "visual occupancy" was sufficient to satisfy the plaintiffs' claims that occupancy ,,.of the land was necessary for public use; that alleged re- strictions on the use of the state's police power for aesthetic objectives did notapply when eminent domainwas exercised; and that limiting the easements to non-urban relatively undeveloped properties did not Constitute a denial of equal protection of the law. overall objectives of the scenic easement program. Temporary variances apply to such things as seasonal directional signs for off-premises activities, and may be granted by the high- way..district subject to headquarters approval. Permanent var- iances require the approval of the Highway Commission itself,as well as the district and central offices. They consist of suchmodifi- allowing development of part of a property under ease- ment in return for dedication of additional depth or frontage of easement in another part of a property. Analysis of all land sales between 1950 and 1975,in each 40-acre tract including,or bordering the Great River Road near La 1 Crosse indicates that land under easement has sold for lower ,prices than land without easement. See Table 5-1. Definitive conclusions cannot be drawn from the data, however,, because of the limited sample size,:the many years over which the sales. took place, variability in slope and quality of land, range of distance fromLaCrosse, etc. one would, of course, expect'land under easement to sell for less than unrestricted land. The more interesting question, which could not be answered.because of the difficulty of retrieving data on,payments.for easements, is whether the owners were accurately compensated for their loss of. development potential. 1La Cros.se is. the largest city (and the only SMSA) near which a large.number of easements has been acquired. This analysis also update s Matuszeski's 1968 study. -142- Table 5-1 COMPARISON OF PER ACRE SALE PRICES IN THE GREAT RIVER ROAD STUDY AREA (Near LaCrosse, Wisconsin) 1950-1975 Number of Price/Acre Transactions (1967 $) ADJACENT TO VILLAGES Tracts of 2 acres or less without easement 11 2072 with easement, 2 1727 Tracts greater than 2 acres without easement 3 705 with easement 0 --- NOT ADJACENT TO VILLAGES 'Tracts,of.2. acres or less without easement 9 2218 with easement 7 750 Tracts greater than 2 acres without easement 4 552. with easement 18 135 54 Out of@a total of 108 transactions, complete data 'were available .on only 54. Most of the remainder were tax exempt, and therefore ,did not have revenue stamps from which, sale price could be de- termined. -143- The goals of.the easement program were never spelled out beyond,the, 1939 joint commission s recommendation to preserve the. "heritage and folklore of the river area." The,implicit 'goal of the administrators appears to have been to retain lands adjoining the Great River Road and other highways in the rel- atively undeveloped state they were in when the program began. The objective.was not to prevent all development, and second homes and cabins were not felt to be inconsistent with the program-goals. In fact, the efficiIent movement of traffic.--' whichwas the basis for the 300-foot frontage requirement has played an important tole in program decisions, while evi- dently little serious analysis of the landscape has.been under- taken.in order to find out how best to tailor the easements to preserve the more important views. The proliferation of advertising signs and strip commer- cial development in unresticted areas near LaCrosse and in the villages, and its. lack in the controlled areas, indicates that the scenic easements have had a definite effect. The scenic easement pr .ogram appears to have been effective in meeting some- what limited goals, but one can question whether the goals themselves were adequate in view of the problem. Involving a broader range of viewpoints in formulating and administering the program might have resulted in a more complete statement of -1.44- objectives and in operating guidelines more sensitive to protect- ing landscape values. At any rate, for two reasons the results of the Wisconsin program are only marginally relevant to the preservation of ag- ricultural lands or extensive areas of environmental value which are threatened by urbanization. First, most areas under easement are remote and development pressure is low (although the area chosen for sales analysis was under moderate urban pressure). Second'. the restrictions are quite mild and generally do not critically hamper the type of development which has been going on.in the area: primarily single-family houses, many.of them vacation houses, on large lots. Stronger restrictions would be necessary if extensive areas are to be protected for agricultural or environmental reasons. -145- it., Suffolk County (N.Yj Farmland Preservation Program Suffolk County's program was designed ekplicitly to retain extensive areas of highly productive farmland which were being threatened by urbanization. It was the first,program approved by',a legislative body which called for the public purchase of development rights to retain farmland. Even though the first development rights are yet to be purchased, the program is still one of the national leaders and can teach us much about the problems, issues, and.potentials of this approach to agricul- tural preservation. Suf folk County, occupying the eastern two-thirds of Long Island, has been under substantial growth pressure from the expanding New York metropolis. Population increased by 69% during the 1960's,and,by 1970,the county contained 1,211 persons per square mile. Most of the population, however, is concentra- ted in the western part of the county. The five towns on the eastern tip of the Island had an overall population density of only 223 persons per square mile in 1970,and contained 46@000 acres of farmland 82 percent of all the farmland in the county. The county's agricultural soils are excellent (472000 acres in class I and class II soils), and in 1974,the county led all other.New York counties in value of agricultural pro- duction. -146- Although the annual sales of farm,products per acre has risen in recent years, the value of farmland has risen even faster. Farmland in eastern. Suffolk is often worth $6,000 per acre to � developer, but agricultural production can sustain at the most � value of around $2,000. The amount of land in farms has dropped from 123,000 acres in-1950 to 56,000 acres in 1974. This loss of farmland has caused widespread concern in Suffolk County, not only because of the loss of food production, but because ofthe loss of very scenic bpen space, and because farms protect and help re- charge.Suffolk County's underground water supply, which increas- ingly.is being depleted by urban demands. In,order to develop solutions to.the problem described above, County Executive John V.N. Klein appointed an Agricultural Advisory Committee in 1972. Its 1973 interim report to the legislature named three problems facing farmers: increased property tax burdens,, liquidation of farms to pay estate and inheritance.taxes, and the disparity in1value between agricultural an d urban uses of theland. The report identified 40,000 acres of "optimum" farmland based on soil type, current farm use, and compatibility of adjacent uses, and propsed that 30,000 acres of the total be preserved by means of.cluster zoning with either purchase of development rights or5 when the value of development -147- rights approached full market value, purchase in fee and.lease- back for farming. The optimum farmland identified for preser- .,vation is shown in Figure 5 - 1. In March 1974, in its final report. to, the legislature, the committee recommended that available funds .be used to purchase the development rights of farmer-owned land and adjacent nonfarmer-owned land in contiguous parcels total- ling at least 200,acres. An expenditure of 15 million in each .of 1974, 1975, and 1976 was requested to implement the program, which was to be voluntary and not to,involve condemnation. The legislature responded by passing Local Law 19-1974,, which authorized the County Executive to solicit offers from owners of farmland to sell development rights; Local Law 19-1974 did not appropriate a ny funds for acquistion. Klein, in turn, established a Select Committee on the Acquistion of Farmlands composed of county,.local,,and legislative officials to develop the precise procedures for implementing the plan. In a Novem- ber 1974 report to the legislature the Committee. outlined the following procedure: 1 Suffolk County Select Committee on the Acquisition of Farmlands, "Report of the Suffolk County Legislature," Nov. 7, 1974. Figure 5-1 LOCATION OF OPTIMUM FARMLAND AND PARCELS OFFERED. E F 00 Pacels offered for Purchase of Development Rights, MANHATTAN to, g "land Sound - Optimum Farmland 62 W 2 1 0 2 4 - Urban Built Up YORK 6 CITY Atlantic Ocean - Other Land Miles -149- I., Identify all farms and their owners. 2.1 Solicit, sealed offers from owners. .3. Evaluate offers based on soil type, contiguity to,other offered:,farms., price, development pressure, exiisting buffers, current use, and ownership (resident or absentee). 4. Appraise acceptable parcels to determine market and farm use value. Based on.comparison of appraisals and offers, request legislative.approval to purchase development.rights from certain parcels. 6. Following appropria,tion.by the legislature, proceed with acquisition. Offerswere subsequently solicited, and on February 11, 1975, 'the.co,unty opened offers of sale of development rights on a total of 17,949 acres at a total cost of $116.5 million. Follow- ing review of the offers based on the Select Committee's criteria and independent appraisals to evaluate the reasonable- ness of the prices asked, the legislature was requested to approve a 30-year bond issue of $21 million to purchase develop- ment rights on 3883 acres. This was to be Phase I. In Figure 5-1, the Phase I parcels are overlain on the optimum farm areas. A second phase, involving $35 million for an additional 8000 acres, was to follow. Phase II was to,include those parcels for which installment payments had been requested by the owners', but the county decided to withhold action onthese offers pending receipt Table 5-2 OFMS AND APPRAISALS FOR PHASE 1, SUFFOLK COUNTY FARMLAND PRESERVATION PROGRAM QLfer/Acre Appraisal/Acre Locatio Parcels Acres Mean median Rancie Mean Mpdian Range Southampton 10 547 4729 4500 3500-5218 4654 4675 4301-4875 Area A 10 547 4729 4500 3500-5218 4654 4675 4301-4875 Southold 17 609 4591 4595 2439-10,018 4330 4426 2625-6875 Area B 3 175 6252 7000 3800-703 1 4560 4150 4000-6875 Area C 5 172 2892 4058 2439-4077 3231 4247 21625-4250 Area D 9 262 4982 4900 4000-10,018 4742 4750 4275-5208 Riverhead 33 2727 4474 4323 24,83-6500 4622 4675 3000-8000 1-n C> Area E 3 125 5325 4600 4600-6000 7204 1550 67,00-8000 Area F 4 555 4625 4976 3467-5885 4059 4063 4050-4075 Area G 6 620 4682 4738 4200-6500 4513 4425 3750-5525 Area H 4 223 4277 4226 2483-5000 4590 4516 3000-5125 Area 1 16 1204 4248. 4100 3500-5572 4205 4775 3100-5775 ALL AREAS 60 3883 4550 4500* 2439-10,018 4545 4612 2625-8000 NOTES: 1.0ffersare for cash sales only; no installment payments included. 2. Appraisal figures do not reflect 1977 updating.. 3. Total offers equal $17,689,000; average offer per farm equals $294,817. 4. Average size of farm offered equals 65 acres. -151- of an Internal Revenue Service ruling regarding the treatment of the installment gain. By the time Phase I came to a vote in the spring of 1976, opposition to the program had developed among some legislators based on the size of the bond issue, which would cost approx- imate.ly $2 million per year to retire (assuming 7.5% interest). When it became obvious to the programes supporters that thev did not have the twelve votes (2/3 of the legislature) needed for passage, they voted on May 10, 1976 to table the program i1ndef-, initely.' The supporters,continued to lobby for the program during the summer of 1976, and on.September 1.0th Phase I was approved'. 13 to 2. at a special session of the legislature., The vote was immediately challenged in court by the two dissenting legislators and one of the three who had abstained, based on a technicality in the way in which the bill was. re- called for a vote.. The suit was subsequently dismissed by the State Supreme Court, and at the time of this writing, appraisals are being updated by Klein's staff prior to commencing negotia- tions with property owners. The county administration also plans to proceed,with Phase II,,as well as possible additional phases involving new offers and condemnation of key parcels not offered by their owners. -152- iii. The New Jersey Farmland Preservation Program The agricultural tradition remains s trong in New Jersey, the "Garden State". even though it is the most densely populated of the 50 states., with 953 persons per square mile overall in 1970. most of the population, however, is concentrated near New York City and near Philadelphia. Nine of the state's counties, predomihantly located in the northwest and southern portions of the state, had less than 400 persons per square mile in 1970 And form the core of New Jersey's agricultural industry. Between 1960 and 1974, land devoted to agriculture declined from 1.4 million acres to 1.0 million acres,while state-wide population density increased from 807 to 975 persons per square mile. During that time period the average value of land and buildings per farm increased almost 5 times, while the value of products sold per farm increased only half that much a clear indication that property values are being affected by factors other than the value of agricultural production. The threat to New Jersey agriculture posed by the continued loss of farmland was first recognized by the electorate in 1963, when it approved a constitutional amendment permitting pre- ferential assessment of lands devoted to agriculture and horti- culture. In the mid-1960's Secretary of Agriculture Philip Alampi -153- realized that property.tax benefits.would not be enough to main- tain farming in the face of strong urban development pressures. The experience in New Jersey.suggested that zoning for low density uses was just a temporary arrangement which made possible a forum for discussion with developers, but rarely could prevent a change in use orintensity toaccommodate suburban pressures. As early as 1964, therefore, Secretary Alampi began to talk about the possibility.of purchasing development rights to pre- serve all or most of the good agricultural soil of the state. In 1971, Governor William Cahill requested Secretary Alampi to appoint and chair a Blueprint Commission on'the Future of ..New Jersey Agriculture. The Commission, consisting of, repre- sentatives of farming, agri-business, banking, environmental protection, and farm labor issued its Blueprint Reporton May 1, The report noted a widespread "impermanence syndrome" in New Jersey agriculture and proposed a strategy of 13 policies to deal with the problem. The land use policy provided the ma jor thrust, but the remaining policies were proposed as an integral part of the program. They included continuation of farmland assessment at use value, reduction of inheritance and estate taxes,,and. limitations on assessments by public utilities,' as well as -154- other measures designed to strengthen the@agricultural@'industry. The Blueprint's major land use recommendation.was that each municipality should designate at. least 70% of its prime farmland designated as Class I, II and III-soils plus special areas such as cranberry bogs) as an Agricultural Open Space Preserve. These preserves would total about 1,000,000 acres. owners of the designated land would be,able to sell their development rights to the state for full compensation.. The sale could be made immediately on inception of the program or,if the land owner felt that the land market would indicate higher develop- ment values in;*the future, he could delay the sale indefinitely. Funds for-'purchase by the state would be derived from.a 4 mil (0.4%) transfer tax on all real estate transactions. The objectives and approach of the Blueprint Report gen- erated relatively little oppostition, but the funding scheme was-soon determined to be inadequate. Based on the 1971 level of sales, the transfer tax would yield only $22 million per year, so a billion dollar program to,acquire a million acres of development rights at $1,000 per acre.would require 43 years. In addition, the value of development rights to agricultural properties in all probability would escalate,more rapidly than revenues from a tax on property transfer. A.1974 Capital Needs Study Commissio, n endorsed the concept of development easements -155- to protect farmland, but urged that a pilot project be undertaken to test the concept's feasibility prior to attempting statewide application. It was decided that funds from.a $200 million "Green Acres" bond issue for acquisition of open space could be used for I purchasing development rights on agricultural land and a project area consisting of the townships of Lumberton, Medford, Pember- ton and Southampton in Burlington County were chosen by the New Jersey Dep artment of Agriculture as the site of the pilot project after invettigation of twelve sites in different parts of the stave., In'the summer of 1976 the legislature passed a bill authorizing the expenditure of.$5 million of Green Acres funds for the-demonstration project. Bill A.B. 1334, as amended and approved, contains the following major provisions. The Agricultural Pres.erve Demonstra- tion program will Purchase easements on agricultural land on a voluntary basis: eminent domain will not be used. An appro- priation of $5 million is available, to be used within two years. The program will be administered jointly by the N.J. Department of Agriculture and the N.J. Department of Environmental Protection, the agency,which administers the Green Acres program. A program The Green Acres program, funded by a bond issue, is intended to provide funds for municipal or state acquisition of open space. -156- steering-committee, consisting of representatives of township, county and state government, will be established to communicate with land owners and other residents, advise program administra- tors on the suitability of.preserves and appraisal procedures. A Legislative Oversight Committee consisting of Assembly and Senate agricultural committees will be designated to review the, program prior to the purchase of easements, and after their purchase to determine the feasibility of further use of the development easement concept and the identification of possible alternative preservation methods. Thomas J. Hall was appointed field manager, with of fices in the demonstration project area. A brochure distributed to land owners indic ated that the objectives of the program are to determine to what extent owners, especially owners of contiguous properties, are willing to sell development rights to the best farmland; to what extent easements will be offered on the least costly land as opposed to the most costly; to what extent offer prices will be comparable to appraised values; and to what ex- tent the offered agricultural preserve will fit in with municipal master plans. Dr..Hall sees the demonstration going beyond these objec- tives and providing at least partial answers to additional questions: To what extent are the objectives of open space -157- preservation and retention of agriculture compatible? What is the minimum size for an, effective agricultural preserve? To what extent does the purchase of development rights assure the continued viability of agriculture? What effect will agricul- tural preserves have on surrounding development? Will the purchase of development rights concept be accepted within the general community as well as within the agricultural community? In accordance with section 14 of the law, the administra- tors and the steering committee.specified that no more than 35 'percent of a single offer and no more.than 20 percent of the en- tire preserve could consist of woodland (including land support- ing cranberry bogs); qnd specified than no more than 20% of the farm acreage of a given property could be withheld from the amount offered by the owner for the preserve. Restrictions on the use of farmland within the preserve proved to be much more difficult to agree upon. The Department of Environmental Protection argued that anything other than actual crop production would be in conflict with the open- space requirements of the Green Acres program. Local repre- sentatives on the steering committee, most of whom were.farmers, urged that agriculture-related activities such as washing and packing of blueberries be permitted. After intense and lengthy -158- discussion at the September and October steering committee meetings,'draft rules and regulations incorporating a compromise, were published in the New Jersey Register on November 4, 1976. The compromise limited use of lands within the preserve to "the production for commercial purposes of crops, horticultural pro- ducts, and livestock and livestock products." The following are also permissible activities: 1. Washing, cleaning, and packaging of raw products produced on-site. 2. Processing and retailing operations which are a con- tinuation of activities existing at the,time the easement is conveyed to the state. 3. Retail merchandising conducted from a non-permanent roadside stand. 4. Dwellings for agricultural laborers or farm families. 5. Recreational activities not interfering with agricultural production. Subdivision of land under easement and erection of any improve- ments was prohibited without approval of both departments. Following a public hearing on the proposed rules on Nov- ember 23, 19769 the farm representatives on the steering committee again urged that the restrictions be relaxed to permit farmers to use the current technology. The Department of Environ- mental Protection refused, and according to some observers 8 N.J.R. 506. -159- almost terminated its participation in the demonstration project at that point. Through the personal efforts of Secretary Alampi the project was kept alive, however, and the final version Of the rules and regulations was approved by both depart- ments, on January 26, 1977. The only changes to the draft were the following: I.. Retailing activities were limited to a maximum of 2 acres per farm and to 3,000 square feet of structure. 2. 60% of the products sold at stands within the preserve must be produced in New Jersey and 25% produced within the demonstration area. The next order of business was drafting the deed covenant to be used in the actual conveyance of easements. After con- sideration of additional questions regarding permitted uses raised at.the February 1977 steering committee meeting, and.a brief delay in which the Attorney General was asked to resolve some remaining legal questions, the Commissioner of Environmental Protection and the Secretary of Agriculture approved the standard deed 6.vvenant on April 14, 1977, and the program became fully. operational. The covenant contained essentially the same language as the rules and regulations concerning uses permitted within the preserve, but also provided that the state Would have the right of first refusal in any sale of the fee simple interests of land subject to an easement. (This may be the first use in the U.S_.; of-preemption for an environmental preservation program). -160- According to NJDA officials, this provision was included to pro- tect the state's investment by allowing it to purchase the underlying fee in the event that agriculture was no longer viable. Since farm value would be close to zero in that event, presumably the state would be able to acquire full rights to the land for other public purposes at nominal cost. Guidelines for appraisals were also approved in April 1977; these specified that the market value be based on the highest and best use of the property considering the likely land-use pattern in the community, and that farm value be determined by the residual income approach (as used for the Farmland Assessment Act) and other applicable methods. Appraisers will be provided with production cost and marketing data by Rutgers, the State University. Since the same_data are used for the farmland assessment program, farm values for the two programs will be virtually identical. On April 18, 1977, copies of the offer form and deed covenant were mailed to all farmland owners.in the demonstration areas, and during May .1977 a final informational meeting was held in each of the four townships to answer questions from owners prior to the June lst deadline for receipt of offers. While many of the comments.and questions concerned matters which had been discussed previously by the steering committee, the thrust of the program was clarified by several comments by the N.J. Department -161- of Agriculture: .1. Offers will be used primarily to judge the seriousness of the owners' interest-in participating in the project. Appraisals will constitute the basis for acquiring easements, even if higher than the owners, I own eval- uation. 2., The state cannot guarantee the right to farm within the preserve,, but will do all it can to prevent local ordinances which limit normal farming activities on the basis of nuisances. State designation of farming as the primary land use within the preserve should aid farmers in this regard. 3. If land within a preserve is required for a public utility such as a pipeline or a power line, the owner will be compensated for additional encumbrance of the underlying fee. The state will do all it can to pre- vent condemnation which alters the character of the preserve, but has no power to prevent condemnation by public agencies with the power of eminent domain. 4. Farmland capable of sustaining production, even if not presently farmed, can be included in the offer. 5.. The emphasis of the pilot program is on assembling large, contiguous tracts of prime farmland, but owners of smaller parcels should not hesitate to submit offers if they are genuinely interested in participating. 6. If a small number of "holdouts" threaten the viability of the preserve or a portion of it, the state will try to persuade the remaining owners to participate. In no event, however, will eminent domain be, used. The possibility exists that a holdout property could be restricted to agriculture by zoning (without compen- sation) if farming was established as the most appro- 'priate use for the area by the existence of the surround- ing preserve. 7. If a local crop failure made it impossible to adhere to the retailing requirement of locally grown produce -162- specified in the regulations, the state would almost certainly grant a waiver. 8. Payment.for development easements can be spread over five years to minimize capital gains tax. 9. Even though $5 million may be able to purchase only a small percentage of the eligible farmland within the demonstration area., that should not discourage inter- .ested owners from stibmitting offers. Since this is a demonstration project, much can be learned about the development easement concept which can be applied later at a larger scale. Furthermore, a favorable response by demonstration area owners could influence the legislature to provide more funds, either from the Green Acres bond issue or from other sources. .The last comment apparently was taken seriously by the pilot area property owners. As of June 1, 1977, offers on approximately 12,000 acres from close to 100 owners, at a price totaling about $35 million, had been received, and enough owners had requested additional time to submit their offers that the deadline has extended to August 1, 1977. At the time of this writing, the state is reviewing the offers for acceptability prior to assigning appraisers, and it appears that several large contiguous areas are included in the land offered. b. Purchase and Sale or Lease With Restrictions No useful examples of programs employing purchase and resale with restrictions are known of in the U.S. Some experience -@with purchase and leaseback, however, is being acquired in Massachusetts, where a number of Township Conservation Commissions have purchased farmland and other land for conservation purposes, -163- and in Saskatchewan where a major program of purchase and resale is in existence. i. .Massachusetts Town Conservation Commissions! Programs of Purchase and Lease. In 1969 the town of Linc,oln,Massachusetts,,initiated a lease- back program which has served as a model for other concerned towns. Currently.12 Massachusetts towns lease more than.800 acres of public conservation land to nearby farmers. (Table 5-3) Much of the leased land was owned by town Conservation Commissions prior to the initiation of lease.back programs. in towns where Conservation Commissions have actively sought out farmland for purchase and leaseback, the agricultural resource value of the land has usually been only one of many attributes justifying public purchase. other important considerations have been the land's visibility from the town center, proximity to other protected open space lands, location in a projected greenbelt, or value as a buffer between areas of conflicting land-use. Some farmland purchases have been incidental in that they have been acquired only by virtue of being included in a parcel sale in which other types of lands were the major motivation for purchase by the town's Conservation Commission. Currently more than half of the land in town-operated leaseback programs is used for the production of low-value Table 5-3 PURCHASE AND LEASE WITH RESTRICTIONS IN MASSACHUSETTS TOWNS Lease Renew- Terms able Lease Year of or Selec- Leased Land Program Acres Rental Lease Nego- tion Formal Close to Other Began Town Leased $/Acre (years) tiable Process Lease Farmland 1966 Concord 92 20-25 life ---- personal yes ---- 1969 Lincoln 200-250 15-20 1-2 yes personal yes yes 1971 Falmouth 140 f(output) 5 yes open bid yes no Sudbury 33 18-25 2-3 personal yes yes 1972 Harvard 69 f(output) 3-10 yes-no personal yes yes CT*% Wayland 67 5-35 3 no open bid yes yes 1974 Duxbury 80-100 f(output) 10 yes open bid yes Ipswich 10 20 5 yes personal yes yes 1975 Swansea 30-40 26 2 yes open bid yes no Woburn 5 25 2 ---- personal yes no 1977 Amherst 12 15 5 yes personal yes yes -165- crops, such as field corn and hay. This is, in part, due to several factors: the location of many of the early-leased lands on conservation property which was unsuitable for higher value crop production; theminimal goal of most towns to keep the land cleared and in agricultural use: the objective of @extensive recreational use of the land after harvest; and the desire of towns to support the preservation of agricultural lands without "getting into the agricultural business". In.some towns, initial leaseback efforts were cautiously limited to the leasing of landfor low-value crops for short terms(ranging from 1 to 3 years) at low rates. These appeared successful in providing benefits to the town through the main-. .tenance,of agricultural land and open space, as well as ben- eficial to the farmer by providing him the use of Agricultural land (not available for purchase at its agricultural value) needed to expand farm operations to an economically-viable scale. This success encouraged a number of towns to expand their farm- land leasing programs. In the past three years there has been an increase, not only in leased acreage, but also in efforts to focus on the preservation of prime agricultural-conservation land. And there has been an increase in the willingness of towns to enter into longer-term agreements whereby farmers can expect reasonable -166- returns on their investments in.the.land for high-value crop cultivation (e.g., fertilizers, soil conditionersl drainage ditches, etc.). 1 For the 725 acres of land leased for a fee, the average license or lease fee is $25 per acre. For low-value crop lands within the program the average rental rate is $21 per acre; for high-value crops it is $27 per acre. Rental prices, arrived at either through open bidding or informal agreements, are slightly higher than private rental rates in the same areas. These vary from $15 to $20 per acre for field corn and hay and from $20 to $25 per acre for vegetableand small fruit crops. 2 Private rental rates do not necessarily reflect the agricultural value of the land. Landowners often lease farm- land,at a modest rate, simply to maintain their property in a productive condition. Thus, while the average public rate is somewhat higher than that for private rentals, it is not inconsistent with the current value of rented farmland. 1To circumvent a legality which requires that the legislature vote on the leasing (or other specified disposition) of any agricultural lands (Mass. Constitutional Amendment to Article XLIX) the towns issue legally-acceptable licenses rather than leases. 2 Estimates of private rental rates for farmland were provided by County Cooperative Extension Service Agents in counties with towns participating in purchase and leaseback programs. -167- It appears that the rentals charged are sufficient to offset the property taxes lost yearly, but will not recapture the capital expense or interest on bonded purchases (even though towns often cite as benefits the recompense of the acquisition price). In assessing this program, it is important to bear in mind that it is not a formal program established with broad-based state support, but rather a land-use technique adopted independently by towns as part.of previously existing conservation programs. It is not an attempt to preserve agricultural land as such, but rather to include the agricultural use of land along with conservation and ecology as an important consideration in the prote ction of areas with high natural values. ii. Saskatchewan Land Bank Program In Saskatchewan,, where the Land Bank Commission oversees a major and well established program for influenc ing the pattern of Iand tenure, there has been extensive experience with a purchase and lease system. The Land Bank Commission was created by the Land Bank Act of 1972 and consists of three full-time commissioners appointed by the Lieutenant.Governor in Council. In addition, the Commission has several administrators, twelve regional counsel- ors (covering ten regions), six appraisers, and an appeal board. -168- Since Saskatchewan is largely outside the sphere of urban influences, the.objectives of the.Land Bank Program are not oriented toward retention of farmland but rather toward aspects of land tenure. Despite this orientation, the operation of the program is instructive. Basically, the Commission engages in three types of ac- tivities (Fifth Annual Report of the Land Bank Commission): 1) Purchase of farmland from retired farmers or others wishing to sell voluntarily; 2) Lease of farmland to younger, capable farmers to begin or expand commercial operations despite their relatively low level of assets; the leasing aspects of the program .are also intended to encourage transfer of land from one generation to another within a family and to facilitate the establishment of viable farming units; and 3) Provision of advice on farm and financial management. The Land Bank Commission can purchase farmland from anyone desiring to sell, but priorities are given to retiring farmers in financial difficulty and to larger tracts of land, especially those forming full farm units. The price offered for a tract of land is based upon expert appraised values of any relevant sales. Generally, once the land is acquired by the Commission it can be leased to a farmer in the next calendar year. Leases are of two types: long term and short term. Long term leases are the norm and these are made for a period -169- eXtending until the time the farmer is 65. The annual cash rent paid by the farmer must lie between 5% and 6.5% of the current market value of the land (for 1977 it is 5.5% of the land value). Buildings and improvements are sold to the lessee and will be re- purchased by the Commission at the termination of the lease. After five years, a long term lessee may purchase the land from the Commission if he desires. Short term leases may be granted to farmers over 65 or to others if no long term lessees can be found. In order to be eligible to lease land, the applicant must declare his int ention of making farming his principal occupation, not exceedincome and net worth restrictions, reside in Saskatch- ewan, and be a Canadian citizen or a landed immigrant. If more than one applicant desires the.same land, the Commission has established a point system for determining objectively who is to get priority. Points are awarded on the basis of net income (fewer points for greater deviations from an optimum income based on family size), age (maximum points if the applicant is between 23 and 35), size of the applicant's farm, if any, proximity of the desired parcel to the applicant's current farm- ing operation, if any, livestock productivity, expected use of land and improvements, education, experience in farming, pre- ferences among applicants by the vendor of the land, previous -170- leasing of the land, and management ability. Applicants may be individuals, cooperatives, partnerships, or corporations. Funds for purchase of land by the Commission are loaned over a long term to the Commission from the Provincial Depart- ment of Finance. In addition revenue comes from leases, interest, and other sources. Administrative costs are paid by a grant from the Provincial Department of Agriculture. By the end of 1976 approximately 1,000 square miles of land were leased out to farm operators, indicating that the program is fairly popular. A summary of land acquisition for the period 1972 to 1976 and land disposition for 1976 is given in Table 5-4. -171- Table 5-4 SUMMARY OF SASKATACHEWAN LAND BANK COMMISSION OPERATIONS* Acquisition 1972-1,976 Offers made to private vendors 3,359 Offers accepted and not retracted 1,573 Acreage acquired from private vendors 721.%292 Value of private vendor acquisitions $59,718p973 Disposition for 1976 Only Number of leases in effect as of Dec. 31,- 1976 1,707 Number of lessees as of Dec. 311,1976 1,623 Number of applications to lease land in 1976 1P187 Number of agreements entered into in 1976 401 Long term agreements: Number 368 Acres 1331696 Long Term Leases Commencing in1976 Number of lessees with no previous lease 340 Number of lessees who were the vendors 54 Number of lessees who were the direct decendant of vendor 48 Average age of lessee 33 years % lessees 20-30 years of age 54% % of lessees who,farmed no other land 17% Average net worth of lessee $35,000 *Sources: Annual Reports of Land Bank Commission, 1972-1976. -172- c. Exercise of the Right of Preemption. In a number of European countries, various unitsiof:govern- ment have been granted the right of preemption in order to acquire land for land banks or for specific development projects. In France, in addition to this form of preemption, the law auth- orizes preemption for the purpose of preserving farmland. The ample experience with preemption in France shows that it is a land use control which works to assist those who wish to remain in farming to obtain suitable land and to keep prime land from being subdivided. Preemption is a power compatible with the American legal system and with American values. There is ample precedent for it in the private market's use of the right of first refusal., With minor modlifications, it could be adopted in.the United States for the purpose of preserving farmland. i. The French Experience. The Farm Law of 1960 authorized 1 the creation ofimon-profit companies, called SAFERs,, to buy and sell farmland. A SAFER could be formed to serve either a single department (county) or several departments together. In response to the law, SAFERs were established in all but a Societe d'Amenagement Foncier et d'Establissement Rural, or Company for Land Planning and Rural Organization. -173- few departments of France. Although not required by the law, all of the SAFERs elected acorporate form of organization. Ninety percent of their capital was subscribed by local farm organizations and farm lend- ing institutions and 10 percent by a national company of farm organizations and farm lenders called SCAFR1. which also provides financial, accounting, legal, and technical assistance. @The largest capitalizations, for SAFERs either covering five departments or located in areas of particularly high land prices, ranged from $250,000 to $400,000. The average capital subscription was $200,000 and was for SAFERs covering three departments. While these sums are small, the SAFERs use their capital as revolving funds and also receive national government assistance. By law, the subscribers receive five percent interest on their shares. Although SAFERs are private corporations, control of their activities is divided between the shareholders and the national government, somewhat in the manner of utilities in the U.S. Powers to Buy and Preempt: A SAFER may acquire land either by voluntary sale or by preemption. .1 La Societe Centrale d'Amenagement Foncier Rural, or Central Company for Rural Land Flanging. -174- By voluntary sale, a SAFER may buy any farmland on the open market, or it may offer to trade some of its land for other land in order to assemble.more efficient tracts. It learns of the availability of land from notaries, farmers, the press, and its own staff. Once it decides to make a bid, it is in open competition with any other bidders for the land. Acquisition by preemeption was authorized by the Farm Law of 1962, with the strong backing of farm organizations. To acquire this right, the SAFER requests the prefect to designate a given area as subject to the right of preemption for farm use. About 60 percent of all agricultural land is now subject to a SAFER right of preemption (O.C.E.D.). No land in a development district1 and no land shown in an adopted plan as intended for urban uses may be included. The prefect must seek the advice of farm organizations concerning the proposed des- ignation and then submits a recommendation to the Minister of, Agriculture. If the recommendation is favorable, the Minister publishes a decree designating the area. People selling farm land are deemed to have notice of the decree, and sale without prior notice to SAFER is void. 1&dier French terminology, this includes Z.U.P.s, Z.A.D.s, and Z.A.C.s. -175- Some sales and transfers are exempt from the right of pre- emption: exchanges between farmers, sales to close relatives, sales to a farmer or tenant farmer whose land has been expro- priated, or sales to an adjacent farmer. Tenant farmers have a right of preemption superior to that of SAFER. In addition, rights of preemption held by the state and by other public bodies have priority over the SAFER's preemptive right. An owner who wishes to sell, who has a prospective buyer, and whose land is subject to a right of preemption must notify the SAFER and the tenant farmerl if there is one, by regist,ered mail of the intent to sell, the proposed sale price, conditions of sale,nand the name of the p.roposed buyer. Preemption by SAFER must occur within 30 days of notification, either at the seller's price or by request to the court to fix the price. Be- tween notification of an intent to sell and SAFER's decision to preempt, the seller can reconsider and decide not to sell. If SAFER accepts the offering price, the seller is bound; if SAFER obtains a court determined price, the seller can back out of the sale but must pay the expenses of setting the price. Malaagement and Resale: Once land has been acquired, the SAFER determines whether it is in need of improvements, such -176- as drainage, irrigation, berms, windbreaks, afforestation, or restoration.or construction of buildings. If it is, the SAFER, will do the work. While holding the land, the SAFER is likely to place it under short-term leases for farming. Land may be held for five years, or under special circumstances for 10 years, before being sold... During the holding period, which usually is between six and 18 months, the SAFER is likely to be acquiring adjacent parcels to assemble a larger and more efficient tract, contacting nearby farmers who may wish to buy the land or trade some distant parcel for it, and seeking out farmers, such as sons working a too-small holding with their fathers, who wish to set themselves up in a new location. The land must be sold rather than offered on a long-term lease, but, to help farmers lacking enough capital to buy, the SAFER can sell to a group of people wishing to be corporate owner-lessors of a farm. Sales are primarily but not exclusively to farmers. Old structures and poor land may be sold to non-farmers for second homes, for which there is an enormous demand in some parts of the country. Some land may be determined to be more suitable for forest use. Some land may be ceded to or exchanged with 1Groupement Foncier Agricole, or Agricultural Landowning Group -177- land of public agencies for parks, reservoirs, roads, and other public uses. In most instances, however, the sale is to a. farmer. Frequently, there is competition for the land. Which farmer should be chosen as purchaser is a subject to which the.SAFERs give considerable attention. The objective is to sell the land, not to the highest bidder, but to the person who will benefit most as a farmer by its acquisition. Favored by law are farmers with too little land, farmers willing to exchange their present tracts for more efficient holdings., farmers whose land had been condemed,for a public purpos e,, and young farmers anxious to establish themselves. The SAFER must consult a land technical advisory committee of representatives of farm organizations and administrative agencies and obtain approval from the Government Commissioners, prior to signing an agreement of sale. The successful purchaser must agree to farm.the land for 15 years, either personally or with his family. During this period the land may not be sold or subdivided, except under exceptional circumstances with the SAFER's approval. Experience: The level of activity of SAFERs has varied considerably by region as can be seen in Figure 5-2. The north,' northeast, and alpine regions have been relatively inactive. The north and northeast are level or gently rolling fertile areas Figure 5-2 GROSS ACTIVITY LEVELS OF SAFER Total Value of AcQuisitions, Sales, and Improvements (millions of clollars) 67 57 76 P-A 21 56 00 0 20 no S.A.F.E.P. established S.A.F.E.P. boundary a:8061.- :;Is] Department boundary Bouches du Rhone SOURCE: Projet de toi de finances pour 1977. -179- where tracts tend to be large,.reallotment not needed, and farm- ing is holding its own satisfactorily., In the alpine depart- ments, on the other hand,- little land is suited to farming. There, the government's concern is with providing help to prevent excessive depopulation. BordeauK, Burgundy, Gascony, and the Languedoc-Roussillon regions all have had very high levels of SAFER land investment. For the nation as a whole, SAFERs in 1970 brought 13 percent of farmland on the market and 21 percent of such farmland which was subject to preemption (O.C.E.D.). About one third of the purchases were from farmers who had accepted government retirement income. Purchases have been averaging a little under 200,000 acres per year, and sales by SAFERs in the last few years have caught up with this rate, as can be seen in Table,5-5. The price paid by SAFERs runs less than the average price of farmland because the SAFERs tend to stretch their funds by avoiding the high priced urban fringe farmland. In 1970, for instance, SAFERs paid an average of $500 per acre for their purchases, while the national average farmland price was $640 (O.C.E.D.) SAFER activity has led to very 1ittle litigation. In 19701 only 1.1 percent of all purchases involved litigation, -180- Table 5-5 SAFER AND IDV RETIREMENT PROGRAM LAND ACTIVITY, 1964-1975 (in acres).1 SAFER SAFER Land "Liberated" 2 Year Purchases Sales from'Retiring Farmers. 1964 155@000 .522500 237,500 1965 117,500 72,500. 1)402,500 1966 1459000 10050000 1,772,500 1967 155.9000 135,000 1,510)000 1968 182,500 1459000 1,457,500 1969 @200,000 1609000 39237,500 1970 182,500 157,500 3,9037,500 1971 197,500 177,500 2,445,000 1972 207,500 2029500 210802000 1973 195,000 207,500 1,712,500 1974 182,500 1802000 1,552,500 1975 192,500 177.500 N.A. 2PI12,500 1,767,500 20,445,000 ISCEES, Ministry of Agriculture 2 Land "liberated" under IDV (Indemnites viageres de depart) program may be disposed of in three ways. The title of the land may be transferred to a younger member of the family; the 1.4nd my be rented, usually to a neighboring farmer; or the farm may be sold on the open market. In 1972 and 1973, approximately 51 and 59 percent of the land respectively was placed on sale in the open market. -181- and 60 percent of those actions were brought by the SAFERs. Over the years almost two-thirds of all judicial decisions supported,the actions of the SAFERs. The funds available to SAFERs, however, have been limited and as a result, they have not been able to have as much effect on stabilizing land use patterns as might be possible. For example, in the Bouches-du-Rh6he SAFER, which has an average funding level, 54 percent of all agricultural land sold from .1072 to.1975 was for nonfarm purposes, 35 percent was to persons intending to continue farm use, and only 11 percent was to the SAFER. (Nationwide the figure was 13 percent.) since 1962, 16 percent of all land purchased by SAFERs . A throughout France has been by preemption. In Bouches-du-Rhone though, preemption was used for only 4 percent of all land pur- chased. In many other instances, sellers offer to sell to SAFERs voluntarily, knowing that a sales agreement with another purchaser can be preempted. Therefore, the existence of the power to preempt, whether or not it is used, has some effect on farmland sales. -182- 2. Experience with Regulatory Methods a. Exclusive Farm Zoning, i. A general survey Exclusive farm use zoning is now employed or about to be employed in many California and Oregon counties. In addition,, it is found in scattered counties and a few municip- alities primarily in the western part of the country. Only two examples are known in the East, and these two programs (in Heidelberg Township Pennsylvania, and Frecerick County, Maryland) were not enacted until 1977. Large minimum lot sizes and a very limited number of permitted uses are typical characteristics of exclusive agri- cultural zoning ordinances. In addition, some employ additional types of restrictions on dev elopment, such as limits on building permits issued. The provisions of 17 exclusive agricultural zoning ordinances'are summarized in Table 5-6. For the purpose of this study we have adopted a strict definition of exclusive agricultural use zoning and include only ordinances which prohibit non-agricultural uses specifically or indirectly limit the feasibility of such uses by either re- quiring large minimum lot sizes or placing a limit on building permits issued. Each line on the table corresponds to a zoning classification with a given set of permitted uses. Sub-class- ifications can be distinguished by the minimum allowable lot .,Table 5-6 PROVISIONS OF EXCLUSIVE AGRICULTURAL ZONING ORDINANCES permitted Uses* 00 c 60 0 0 c M '4 41 '4 g: " -.4 4 W 14 to '4 C 0 M " I E Clas- :1 :1C to 0 .4 AJ -.4 cc sifi- Based on 'a r 0 Restrictions 00 c cation Prime 0 4) Q0 @4 4) @4 M :a C 0 0 g@ Other than ,4 -1Q 0) -k County or 0 14 Setback, of Minimum Lot Area Soil $4 In ca C W W C -.4 State Township Zones (Acres) Category -C H M X U V, Z Height, etc. California Madera Co. ARE 80,160,320,640 NO x x x 0 ARE 20,40 No x 0 x 0 0 0 0 0 Marin Co. AD 5,10,15,20,30,40,60 NO 0 0 x 0 x0 x 0 0 0 Santa Clara Co. A 10 No x x x 0 x0 0 Solana Co. A 10,20,40,80,160 No x 0 x0 x 0 0 0 0 x0 Tulare Co. A-5 10,20,40,80 No x 0 xo x o 0 x No s ubdivisions A-1 5 No x 0 x0 x 0 0 0 x No subdivisions Yolo Co. A-P 20 Yes x x 0 x0 x 0 x0 x A-E 20 Yes x 0 0 x 0 x0 0 x 0 x0 x A-1 5 Yes x 0 0 x 0 x0 0 x 0 x0 X. 0 Colorado Pitkin Co. RS 30 No x x0 0 x 0 x Limit on bldg. permits Hawaii A I Yes x x x x 0 x 0 0 Iowa Black Hawk Co. A-1 3,35 Yes x x x x 0 A-2 3,35 Yes x x x x x 0 00 Bremer Co. A-1 3,35 Yes x x x x 0 Uj A-2 3,35 Yes x x x x x 0 Buchanan Co. A-1 3,35 Yes x x x x 0 A-2 3,35 Yes x x x x x 0 Maryland Frederick Co. AD 5 No 0 0 x x0 x0 0 0 x Limit on bldg. permits Minnesota Marshan Twp. A-I 5 Yes x 0 x x0 0 x 0 0 x A-11 5,10 Yes x 0 x x0 0 x 0 0 0 Oregon --- A 10 Yes x 0 x 0 x x 0 0 0 Penna. 11cidleberg Twp. A-P 1,50 Yes x 0 x 0 0 x Wisconsin Columbia Co. A-D k No x 0 x 0 0 0 x 0 x x 0 0 walworth Co. A-1 35 Yes x 0 x 0 0 0 0 A-3 35 Yes x 0 x 0 0 0 0 By right - x; Conditional - 0. -184- size. Thus, for example, in Madera County,California, Zoning Classifications ARE-80,1 ARE-160, ARE-320, and ARE-640 all have exactly the same use restrictions, but their permitted minimum lot sizes range from 80 acres to 640 acres. Classifications ARE-20 and ARE-40, which are listed on the following line-, allow somewhat different land uses@than the first group. The use classifications we have employed are set at a very gross level in order to summarize the bewildering number of very specific uses described in the ordinances. Consequently, it happens that certain gross uses are, at times, permitted both by right and on condition. Where this happens, it is to be understood that more specific uses within the gross classifica- tion are considered to be conflicting uses, and are accord- ingly restricted. For example, within the use classification "Farm dwellings" residences of the principal farm family are always permitted by right. In many jurisdictions, however, labor camps or mobile homes for migrant workers are allowed only upon issuance of a special permit given after a zoning board review of-the proposal. Since there is no widely-copied model in this area of land use control, there are numerous small but,important diff- erences in the ordinances. The simplification into tabular -185- form has undoubtedly created distortions. The table should be useful in determining such facts as the minimum lot areas, or the.typical permitted uses, but it should not be used to draw fine comparisons. The three major controlling elements common to exclusive agricultural zoning, as mentioned above, are large required minimum lot areas,, restrictions on non-agricultural use of the land, and other restrictions on development, such as limits on building permits issued. In almost every jurisdiction sur- veyed, there is a gradation of the application of these control- ling elements. This can happen within a primary zone by vary- ing the required minimum lot areas of the sub-zones; or by adopting within the same jurisdiction more than one primary exclusive agricultural zone each of which can vary either in required minimum lot areas, the level of restrictiveness of permitted uses or the direct regulation of the amount of growth allowed. A listing of the most restrictive required minimum lot areas for each jurisdiction is given in Table 5-7. Two jurisdictions have very low minimum lot sizes: Columbia County with a k-acre minimum and Hawaii with a 1-acre minimum. The reason we have included these jurisdictions is that each of them has coupled strong prohibitions on permitted non-agri- cultural uses to the apparently low required minimum lot areas. -186- Table 5- 7 MINIMUM REQUIRED LOT AREAS IN THE MOST RESTRICTIVE AGRICULTURAL ZONES OF EACH JURISDICTION (Acres) Columbia County, Wisconsin @2 Hawaii 1 Frederick County, Maryland 5 .Santa Clara County, California 10 Marshan Township, Minnesota 10 Oregon* 10* Yolo County, California 20 Pitkin County, Colorado 30 Black Hawk County, Iowa 35 .Bremer County, Iowa , 35 Buchanan County, Iowa 35 Wolworth County, Wisconsin 35 Heidelberg Township, Pennsylvania 50 Marin County, California 60 Tulare County, California 80 Solano County, California 160 Madera County, California 640 Minimum lot size not stated in zoning ordinance, but county must "review, approve, or disapprove" creation of any parcel of less than 10 acres. -187- In each of these programs, single family non-farm dwellings are not permitted, either by right or on condition. Thus, the primary controlling factors are the restrictions on permitted uses, and as these are strongly restrictive it is desirable to include these programs in our review. In Oregon there is no formally required minimum lot area. However, it is mandated that "any proposed division of land ... resulting in the creation of one or more parcels of land of ,less than 10 acres in size shall be reviewed and approved. or disapproved by the governing body of the county." A glance at Table 5-7shows that the four most restrictive jurisdictions are the California counties of Madera, Solano, Tulare and Marin, with required minimum lot areas of 640 acres., 160 acres, 80 acres and 60 acres respectively. Two points should be made here. First, each of these,very high minimum required lot areas represents the most restricted sub-zone of the-primary exclusive agricultural zones and are negotiated voluntarily with farmers who contract with the State of California under the Williamson Act for tax relief and other benefits in return for a 10-year pledge to keep their land in agricultural use. Thus, these zones are not forced on unwilling owners, and consequently are not likely to face legal challenge. Also they tend to be -188- found in the more rural areas, which are not facing intense de- velopmental pressures. Therefore, their usefulness in protecting agricultural land against the full spectrum of development pres- sure has not been tested. Pitkin County, Colorado, had a truer 160-acre minimum required lot area until May 1977, when under threat of a court challenge the ordinance was amended to allow for a 30- acre minimum required lot area. Four of the zoning ordinances differentiate minimum lot areas according to the quality of agricultural soil. In the three Iowa counties, the 3-acre minimum lot area is applied only to those par- cels of land where 75% of the soil is rated less than 80 on the Corn Suitability Rating Scale. This category includes less than ten percent of the soil in each of the three counties. A 35-acre minimum lot area is required for all lands of higher soil quality. In Heidelberg Township, agriculturally zoned land not designated Prime Agricultural Land (that is "all land containing soils which have been classified as having either a corn, oats, wheat, barley, potatoes or hay,productivity rating equal to or greater than one hundred percent of the standard under improved management as de- scribed in the 'Soil Survey, Berks County') is subect to a I-acre minimum lot area, whereas the minimum required lot area is 50 acres on land that is designated Prime Agricultural Land. -189- To summarize the table of the most restrictive required minimum lot areas, it can be said that while the list varies from.@ acre to 640 acres, the variance of the true level of- restrictiveness of this controlling element is not nearly so great. This is both because of the nature and circumstances in which the minimum lot area regulations are implemented; and because. this*specific element is but one of three which can contribute to the overall restrictiveness of an exclusive agricultural zoning ordinance. The second controlling element of excl usive agricultural zoning is the limitations on permitted uses of the land. In Table 5-6 the use classifications permitted in addition to general farming are arranged in a continuum which very gen- erally represents potential impact on serious farming. Typically special permits are to be issued only after a review by the zoning board to determine the proposal's consis- tency with the purpose of the zone. Each proposal for a non- agricultural use thus may be subject to conditions that limit its impact. The most critical use affecting the viability of serious farm production is non-agricultural residential development. Multi-family dwellings are prohibited in all the exclusive agricultural zoning ordinances. Single family, non-agricultural _190- dwellings are allowed by right in only 5 jurisdictions:-.Tulare, Pitkin,and Frederick Counties and Marshan and Heidelberg Town- ships. They are allowed on condition in seven jurisdictions, usually in the less restrictive of several agricultural primary zones within that jurisdiction. The controlling element in these instances, then, are the minimum lot area requirements or flother restrictions." Three jurisdictions rely on other restrictions. Tulare County prohibits subdivisions, defined as "any real property, improved or unimproved, in a unit or as contiguous units, which is divided for the purpose of sale, lease or financing, whether immediate or future, by any subdivider into five or more par- cels." Both Pitkin and Frederick counties make use of limits on the number of,building permits allowed within the agricul- tural zone. Fre derick County allows but 3 building permits per 50-acre parcel. Pitki-n County has developed a formula for calculation of the number of building permits allowed in each of its various zones. This formula weights the agricultural zone such that fewer building permits are allowed per unit.of land than in other zones. While it is not possible to combine the three major con- trolling elements of each ordinance to provide an overall index, it can be seen that jurisdictions have attempted to _191- combine these in a way balanced to meet their particular ob- jectives and circumstances. in several jurisdictions, lower minimum required lot areas are coupled with severe restrictions on permitted uses.. This allows for greater freedom of development for those uses which are considered.to be consistent with farm production. In other ordinances, many uses will be permitted, but a high required minimum lot area will be imposed to insure that'the level of potential impact will not be sufficient to disturb agricul- tural activities. Judged by the combined criteria of location in a standard Metropolitan Statistical Area, population density, and increase in population density (Table 5-8), only 5 of the 13 counties with exclusive agricultural zoning can be considered to be under significant urban pressure. These are Santa Clara, Marin, and Solano counties in California, Black Hawk County in Iowa, and Frederick County in Maryland. The performance of zoning in these counties especially will bear watching as development pressures continue to mount. Although urban pressures are too light and the periods the ordinances have been in effect are too short to draw any formal conclusions, a survey.we have conducted of local -192- Table 5-8 URBAN PRESSURE ON JURISDICTIONS WITH EXCLUSIVE AGRICULTURAL ZONING Located In Persons per Sq. Mile SMSA Increase 1974 1970-1974 Santa Clara Co. yes 909 361 Marin Co. yes 412 118 Black Hawk Co. yes 222 16 Solano Co. yes 151 42 Frederick Co. no 142 22 Walworth Co. no 118 20 Yolo Co. yes 102 29 Heidelberg Twp. yes 95 14 Bremer Co. no 55 4 Columbia Co. no 54 4 Marshan Twp. 45 4 Tulare. no 42 5 Buchanan Co. no 39 -1 Madera Co. no 21 1 Pitkin Co. no 8 5 -193- officials yields the following information (Table 5-9). A rather small number of zoning changes have been re- quested. of the relatively few changes proposed, relatively large percentages were granted. Only one significant court challenge to an agricultural zoning ordinance was reported. The small number of changes requested might be ascribed either to a lack of demand for development, to the reluctance to commit the time and money necessary for the review process, or to the opinion of potential developers that there would be little hope of getting a requested change in zoning. The lack of demand for more development, which was noted above, seems to be the most likely explanation, although the expense and bother of attempting to obtain a zoning change may discourage poten- tial developers particularly if demand is low or moderate and if alternative sites are available. Some of the zoning changes reported were simply tech- nicalities, as in Walworth County, where it was necessary to rezone the land on which a new highway was constructed. In other cases many of the changes were small in scale and prob- ably did little to weaken the agricultural or rural character of the area. On the other hand, the small number and acreage Table 5-9 CHANGES TO EXCLUSIVE AGRICULTURAL ZONING TO ACCOMODATE DEVELOPrENT Variances and changes of zone Granted PropoIs ed % of % of Type of Amendments County or Number Acreage Develop. to Provisions State Town s h i p Number Acreage Proposed Proposed Allowed of Ordinance Court Challenges California Madera Co. 25 1,300 76 92 industrial None Excl. agric. zoning with minimum 18-acre parcel size valid. Marin Co. None ---- ---- ---- ---- None -None Santa Clara Co. None ---- ---- --- None Noild Solano Co. 14 1,282 71 88 housing None Tulare None ---- ---- ---- Largur mintinwn Nonc lot area adopted Yolo Co. None ---- ---- ---- ---- Subdivision below min. lot area may be approved by Planning Comm. if consistent with purposes of zoning ordinance. Colorado Pitkin Co. 3 (NA) 0 0 ---- Min. lot area 160 Pending acres now 30 Hawaii (NA) 14,206 (NA) 33 housing Administrative Adjoining permitted recreation rules changed. to challenge Iowa Black Hawk Co. 69 622 64 59 housing Classification of None industrial prime changed to add more acres. Bremer Co. 6 10 100 100 commercial A-2 zone added. None Buchanan Co. 49 602 84 66 mining None None Maryland Frederick Co. None ---- ---- housin6 None None Minnesota Marshan Twp. 12 (NA) 100 100 housing Corrected am- Pending. biguous wording ---- ---- ---- ---- Pennsylvania Heidleberg Twp. None None None Wisconsin Columbia Co. 118 1,438 47 11 ---- None None walworth Co. 280 (NA) 70 (NA) highway None None, housing -195- of changes of zoning may not represent A complete picture of what is happening to agricultural lands in these counties. In Santa Clara County, for example, the strong development pressure has resulted in a "'rash of 10-acre-lot subdivisions." The re- sulting estates or farmlets do not violate the 10-acre minimum lot size of the agricultural zoning ordinance but are clearly not effective in preserving large tracts of land suitable for commercial farming, or perhaps even not effective in preserving a bucolic landscape. The constitutionality of the Madera, California agricultural zoning ordinance was challenged (Gisler v. County.of Madera) I but the ordinance was upheld. The court said that prohibition of the sale of parcels less than 18 acres in area in order to protect ag- riculture was a reasonable use of the police power. No other sig- nificant court challenges of exclusive agricultural zoning ordi- nances were reported inthesurvey. The lack of challenges,may seem surprising, given the novelty and degree of restriction of the ordinances. It is understandable, however, if in fact developers find it possible to get the zoning changes or adjustments without going to court or if there isn't a demand for higher yield uses. 1 38 Cal. App. 3d 305. -196- Despite this rather murky interpretation of our survey results9 the local officials who completed the survey forms indicated a general optimism concerning the effectiveness of their agricultural zoning ordinances. Six of them answered that it "effectively prevents subdivision and development"; three answered that it "discourages developers from making plans for subdivision and developmentio; one answered that it "pro- vides a format for negotiation with the developer making it possible to incorporate desirable features in the development plans before agreeing to the zoning change"; and one answered that it "has little effect". Three officials answered that there was not enough development pressure to tell. Except for the Santa Clara response (that the zoning has little effect), the responses do not appear to vary with development pressure on the jurisdiction. (See Table 5-10). -197- Table 5-10 ANSWERS BY LOCAL OFFICIALS TO QUESTION: HOW WOULD YOU EVALUATE YOUR EXPERIENCE WITH AGRICULTURAL ZONING SO FAR? Provides Discourages Effectively Year Little Format for Plans for Prevents Ag- Zon- Effect Negotiation Subdivision Subdivision ing & Developmen & Development Adopted Santa Clara, Cal. X 1973 Marin, Cal. X 1972-74 Black Hawk, Ia. X 1973 Solano, Cal. X 1959 Walworth,, Wis. X 1974 Yolo, Cal. X 1969 Bremer, Ia.. X 1975 Columbia, Wis. X 1973 Tulare, Cal. X 1976 Buchanan, Ia. 1974 Madera, Cal. X 1965 Pi.tkin, Col. X 1974 -198- ii. The Oregon Land Use Act and Exclusive Agricultural Zoning. Although Oregon's population densities are still very low in comparison to eastern statest the state has experienced substantial growth over the last couple of decades. Between 1960 and 1974 population increased by 28%. Much of the growth occurredin the western part of the state, along the coast and in the Willamette Valley, which includes Portland, Salem, and Eugene. This growth and its effects on agriculture and the landscape have become painfully evident to many Oregonians. Their reactions came to focus in the 1973 Land Use Act (Senate Bill 1009 ORS Chapter 197). A series of earlier acts provided precedents for the 1973 Land Use Act: a 1961 statute which introduced the concept of exclusive farm use zoning and tied the benefit of differential assessment to it; a 1963 differential assessment act whose sanctions for a change in use are among the strongest imposed by any state in the country; the 1969 Senate Bill 10 which required cities and counties to zone their land and begin work on comprehensive plans; and the Oregon Coastal and,Development Commission Act of 1971 The 1973 Land Use Act, and the goals and guidelines whose development it mandated, require that urban growth boundaries be established around all cities, and that all prime agricultural _199- land outside the boundaries be zoned for exclusive farm use. The comprehensive nature of the act its.elf, the subsequent guide- lines, the state's statutory provisions for exclusive agricul- tural zoning which also provide for indirect measures to strengthen agriculture, and several favorable court decisions provide a mutually reinforcing framework for Oregon's efforts to preserve farmland. The bill established the Department of Land Conservation and Development which consists of the Land Conservation and Development Commission (LCDC), its director and staff. The Commission is required to establish statewide planning goals consistent with regional, county, and city concerns. The goals are intended to carry the full force of authority of the State. LCDC is responsible for reviewing comprehensive plans of cities and counties for conformance with.statewide planning goals. The planning efforts of state agencies are also to be coordin- ated by LCDC to assure conformance with the state-wide planning goals and also compatibility with city and county comprehensive plans. LCDC is also directed to prepare model zoning and other ordinances and regulations to guide state agencies, cities, counties and special districts in implementing state-wide plan- ning goals, particularly for those activities of "state-wide -200- significance: such as transportation and utility systems, and in particular types of areas such as wetlands, flood plains, and agricultural lands. Cities and counties, however, have the basic responsibility for preparing and adopting comprehensive plans, and counties must coordinate land use planning activities of all-local governments within their boundaries (with the exception of cities of over 300,000 population). The major substance of the act is derived from the Goals and Guidelines, which were adopted on December 27, 1974. "Goals are regulations and the basis for all land use decisions relating to that goal subject... [On the other handj ... Guidelines are suggested directions that would aid local governments in activat- ing the mandated goals". I The goals concerning agricultural lands, forest lands, and open spaces, scenic and historic areas, and natural resources, are of particular interest: To preserve and maintain,agricultural lands (Goal 3) To conserve forest lands for forest uses (Goal 4) To conserve open space and protect natural and scenic resourees (Goal 5) Land Conservation and Development Commission, Goals-.and Guidelines, Dec. 27, 1974. -201- The agricultural lands goal states: "Agricultural lands shall be preserved and main- tained for farm use consistent with existing and future needs for agricultural products, forest and open space. These lands shall be inventoried and preserved by adoEting exclusive farm use zones 2ursuant to ORS Chapter 215." (emphasis added). The goal also defines agricultural land as land of pre- dominantly Class 1, 115 111 and IV soils, and in eastern Oregon Class V and VI soils in addition.. LCDC has clarified that the agricultural lands goal does require that all Class I through Class IV soils outside urban growth boundaries be zoned for exclusive farm use (EFU). 1 The forest lands goal states that "Forest land shall be retained for the production of wood fibre and other forest uses. Neither Goals nor Guidelines, however., specify how forest lands are to be retained, although the goals do list seven different types of forest uses including production of trees', soil protection, recreation, grazing, maintenance of clean air and water, and open spaces, buffers from noise, and visual separation of conflicting uses. The goal concerning open spaces, scenic and historic areas5 and natural resources defines eleven different types of areas which are to be inventoried. It is not specific about how they are to be conserved, but it does state..."Where no conflicting uses for natural resources have been identified, such resources shall be managed.so as to protect their natural character. Where conflicting uses for natural resources have -'Letter from Robert E. Stacey, Director, 1000 Friends of Oregon December 21, 1976. -202- been identified', the economic, social, environmental and energy consequences of the conflicting uses shall be determined and pro- grams developed to achieve the goa 1.11 Finally-, the goal concerned with urbanization is of primary importance: "To provide for an orderly and efficient transition from rural to urban land use." (Goal 14). The Urbanization goal then states, "Urban growth boundaries shall be established to identify and separate urbanizable land from rural land." (emphasis added). Essentially all land is divided into four categories (Leeson): Inside the urban growth boundary: (1) 'Already urbanized land (2) Urbanizable land. .(Cities and counties are per- mitted to include agricultural land within the boundary to the extent needed for future develop- ment). Outside the urban growth boundary: (3) Agricultural, forest, and open space land, which is subject to the restrictions spelled out in the goals. (4) Other rural land, which is suitable for sparse settlement, small farms, or acreage homesites with, no or hardly any public services, and which are not suitable, necessary or intended for urban use. The urban growth boundaries are guides to growth which are adopted after technical studies and public hearings, and which -203- may be amended in the future if public need is shown and if the standards for originally establishing the boundary are also considered. The law states that land within farm zones shall be used exclusively for farm use except as specified (ORS 215.203, 215.213). Non-farm uses permitted as of right in farm zones include: dwellings and o-ther buildings customarily provided in conjunction with the farm use, schools, churches, utility facilities ex- cluding commercial power generation facilities, and mining exploration. Additional uses may be established subject to approval of the county: commercial activities in conjunction with farm use, public or private parks, playgrounds, hunting or fishing preserves and campgrounds, golf courses, power generation plants, mines, and personal-use airports. Finally, single family dwellings not provided in conjunction with farm use may be established with the approval of the county only if the proposed dwelling is "compatible with farm uses ... does not interfere seriously with farm practices,...does not materially alter the stability of the overall land use pattern of the area,... and is situated upon generally unsuitable land for the pro- duction of farm crops". In the exclusive farm use zone, any proposed division of land into parcels less than 10 acres in size must be reviewed for con- -204- sistency with Agricultural Land Use Policy (ORS 215.243) and approved or disapproved by the governing body of the county; division of land into larger tracts may be reviewed by the governing body if it wishes (ORS 215.263). These stringent requirements are combined with a number of measures to improve the viability of farming in areas zoned for exclusive farm use: prohibition of local ordinances which would restrict or regulate accepted farming practices because of noise dust, or odor if.such conditions do not interfere with the use of adjacent land (ORS 215.253); exemption from assessments and levies of sanitary and water supply districts (ORS 308.401); qu.alification for differential assessment (ORS 308.345); and valuation at farm use value rather than at market value for state inheritance tax purposes (ORS 118.155 and ORS 808.370(l)). (These provisions are compared with those of the New York Agricultural Districting Pro- gram in Section 2c below). The Act stipulated that Oregon's 36 counties and 230 cities were to bring their comprehensive plans and zoning ordinances into conformance with the LCDC goals by January 1, 1976. LCDC is empowered to grant an extension beyond that date if the local jurisdiction has a comprehensive plan and is making satisfactory progress toward completion. If these minimal conditions are not met, LCDC is required to step in and adopt a plan and zoning for the the non-complying jurisdiction. -205- By November 1976, only two local jurisdictions had com- plied with the Goals and Guidelines. All others were seeking or had been granted.extensions. When a compliance schedule is agreed to, a grant is typically made by the state to the local gove rnmental unit to enable it to carry out the necessary analysis and work with citizens to develop plans consistent with the goals and guidelines. Under current schedules, it will be 3-5 years before most of the counties are in com- pliance. In addition to the general failure to comply in accordance with the original deadlin e, there was considerable evidence during 1976 that some local jurisdictions were.reluctant to comply fully with the reIquirements of the Goals and Guidelines. Two general types of responses have been observed: delineating an excessively large area for the growth zone, and failing to put into the EFU zone all land suitable for agriculture. Primarily because of controversy concerning LCDC's role with regard to activities of statewide importance and corres- ponding-power invested in LCDC over local units of government, a petition was filed calling for a statewide referendum to repeal the Act and was brought to a vote in November 1976. The measure was defeated 57 to 43 percent statewide, with the -206- Willamette Valley strongly in favor of the Act but with the coastal counties voting for repeal. The statewide vote on the referendum must be counted as a substantial,victory for the Act. An expected effort to amend the act in 1977 also amounted, to little. These votes-probably have removed most remaining wishful thoughts that LCDC might be just a temporary phenomenon and that local jursidictions could soon go back to their own ways of dealing,with planning and development. The resolve with which the Act is now being carried out may be indicated by a recent Opinion and Order concerning Marion County (LCDC No. 75-006, 3-2-76) which was signed by Harold Brauner, Director of the Department of Land Conservation and Development on March 3,A977. The order rejected Marion County's proposal not to confer exclusive agricultural zoning on 11,600.acres of good agricultural lan d. Land suitable for agriculture, which is undeveloped and uncommitted to other uses, states the order, is "not to be viewed generally as space, available for development but as the basic re.sourc,e upon which a major.segment of Oregon's economy rests. As the nonreplacable foundation for crops and livestock, it is to be viewed as a primary source of its own rights. The purpose of this resource must be weighed carefully ... Thus, if acres for acreage home- sites are determined to be needed in the Salem area, then all -207- areas suitable for such sites must be considered including West Salem, even though it is.in another county ... ORS 215.213 (3) is very clear that such homesites may be permitted in the EFU zones only under very strict conditions, so as to insure com- patibility with the farm practices used in the exclusive farm use area and to keep the exclusive farm use area free from development." Two recent Oregon court decisions indicate positions similar to that taken by the Order. (Multnomah County vs. Howell 9 Or App 374, 496 P2d 235 (1972), Supreme Court review denied (1973) and Joyce vs. City of Portland, 24 Or App 685, 546 P2d 1100 (1976)). In the firstIcase, the county was upheld in enjoining quarrying on land zoned residential-agricultural and in the second the court upheld a rezoning of over 800 acres from low density residential to farm and forest use. In both cases it was stated that there is no taking without compensation merely because there is a reduction in property value, so long as a substantial beneficial use remains. These cases are con- sistent with the opinion of the Joint Legislative Committee on Land Use that "so long as the most restrictive portions of local plans and zoning ordinances center around farm use designations for prime agricultural land, the beneficial use test will be -208- complied with and the question of taking will not be success- fully raised. There is not yet.enough experience with the Oregon Land Use Act to be able to conclude whether it will be effective in pro- tecting farmlands and environmentally valuable areas from development. The program has made a substantial beginning, however, and has withstood attempts to repeal or weaken it. The promise of the program would appear to rest not only in the strong and explicit provisions of the exclusive farm use zone,(which must1be applied to all soils of SCS,classes I through IV), but also in the comprehensive quality of the legislation. The Land Use Act requires that local jurisdictions prepare comprehensive plans and zoning ordinances consistent with them. Both planning and zoning must be consistent with the statewide Goals and Guidelines, which state that each local jurisdiction mustestablish an urban growth boundary to identify and separate urbanizable land from rural land. In order to strengthen the viability of agriculture in an EFU zone and to somewhat counterbalance the farmer's loss of ability to develop Final Report of the Joint Legislative Committee on Land Use, Nov. 1976. p. 32. or sell for urban development many benefits similar to those of agricultural districting are provided. -210- b. Inverse Condemnation' The only known example of the use of inverse condemnation as a conscious element of a widespread program to protect land from development is in Massachusetts. i. The Massachusetts Wetland Restriction Program, In 1965 the Massachusetts legislature (known officially as the General Court) extended its protection of coastal wetlands throu gh the adoption of Chapter 130, section 105, which restricts and regulates their use. Similar legislation (C. 131, S40A) was adopted for inland wetlands in 1968, and a 1972 amendment provided for the inclusion of flood plains in the inland restriction statute. In brief.9 the legislation empowers the Commissioner of Environmental Management to adopt orders "regulating, restrict- ing or prohibiting dredging, filling, removing or otherwise altering or polluting wetlands". The landowner "may petition the superior court in equity to determine whether such an order so restricts the use of his property as to deprive him of the practical uses thereof and therefore is an unreasonable use of the police power because the order constitutes the equivalent of a taking without compensation. If the court finds the order to be an unreasonable exercise of the police power... the court -211- shall enter a finding that the order shall not apply to the land of the petitioner." The Department of Environmental Management may then 11take the fee or any lesser interest in such land in the name of the commonwealth by eminent domain." The legislature's definition of wetlands is quite compre- hensive. Inland wetlands, for example, are defined as including wet meadows, marshes, bogs, swamps, other areas inundated by ground water for significant periods of the year, and banks touching inland waters or wetlands. The Department's standard order regulating and restricting inland wetlands in a city or town generally prohibits filling or dumping; draining, excavating, or dredging; or any act or use which would destroy the natural con tours of water flow, or otherwise alter or permit the alteration of the natural and beneficial character of the wetland. Certain uses, however,, are explicitly allowed in the restricted land: theconstruction or maintenance of roadways or driveways to unrestricted lands where there is no viable alternative; the installation of utilities; the excavation of boat channels, wildlife impoundments,.and other excavations where no fil 1 is placed on the wetland except that necessary for retention structures; the construction, mainten- ance and expansion of beaches; the construction and maintenance of catwalks, foot bridges, wharves, docks, piers, boathouses, -212- boat shelters,, duck blinds, observation decks, and boat launch- ing ramps; the use or improvement of land for agricultural purposes; the maintenance of drainage measements,_di@ches, watercourses, and artificial water conveyances; and outdoor recreational activity structures. The Wetland Restrictions Division of the State's Depart- ment of Environmental Management maps the areas to be restricted, either wetlands or flood plains, on a town-by-town basis. once this is done, formal notice of a public hearing is sent to all affected landowners$ town selectmen, conservation commission- ers, and assessors, as well as various state agencies. A hearing is held, after which any landowner who feels that his land does not come under the juri ddiction of the law and has been inappropriately restricted may make an appointment with program administrators to discuss the matter prior to the adoption of an order of restriction by the Department. In this manner, errors of inclusion and exclusion are corrected and the mapping of restricted areas is revised. After the hearing, the town selectmen must approve or disapprove the inland wetland order of restriction within 30 days.1 If no action is taken the order is considered approved. Town approval is not a condition of the coastal wet! and re- striction ac-t. (M.G.L.A.. Chapter 130, section 105 -213- If the town disapproves the order, six months must lapse before the Commissioner of Environmental Management may adopt the order or an amended order. Once the order is adopted by the Commissioner, each landowner is notified by certified mail and a copy of the order is recorded in the Registry of Deeds for the district. This is a critical time, for once a landowner or any person having an interest in affected land is notified, he has only 90-days to petition the Superior Court to determine whether the order so resticts the use of his property as to deprive him of the practical uses of the land and is therefore the equivalent of a taking without compensation. This is the process of inverse condemnation --the landowner appealing to the court to determine whether the restricted land has, in fact, been condemned. If so, the restriction is removed and the state is given the option to acquire the fee or lesser interest under powers of eminent domain. There is no formal state-level staff to provide surveil- lance for the Wetland Restriction Program. Once wetlands are restricted) the immediate responsibility for maintaining lands in their protected state lies with local government agencies and individuals. An attempt has been made to extend the responsibilities of town Conservation Commissioners to the -214- protection of wetlands by asking them to maintain informal surveillance of town wetlands and report all violations to the Department of Environmental Management. Once a violation is reported, the Wetland Restriction Program and the Attorney General's office request compliance with the law. Interpretation of the law and restriction order often varies from town to town, as do town needs and desires for development and resource protection. Therefore, the strength of the Wetland Restriction Program is, in part, determined by local needs, values, and priorities. In towns with currently restricted wetlands, development pressures and the desire to protect remaining town resources are higher than in many other parts of the state. A full assessment of local enforcement will not be possible until the program is applied to towns where the recognized ecological and public welfare and safety values of wetlands are less than the values of wetlands as defined by existing laws. Since the enactment of the inland and coastal wetland protectionlaws, orders restricting the use of coastal wetlands and contiguous lands have been recorded for 24 coastal towns. Three of these towns have also had orders recorded which restrict their inland wetlands. Eight additional towns in the Charles River Basin have had orders recorded restricting the use of -215- their inland wetlands. In the 12 years since the adoption of the first wetland protection-restriction law, only 32 of Massachusetts' 351 towns have had any of their wetlands re- stricted under the Wetland Restriction Program. Data availablie for towns with restricted wetland indicate that 24'.045 acres, involving 4,422 property owners in 22 towns have been restricted under the coastal wetland program, and 4,718 acres of wetland have been redistricted in 8 inland towns. The data, howeverl cover only 30 of the 32 towns in the program. While a cursory comparison of the surveyed (Mae Connelly) and restricted wetland acreage would seem to indicate that at least a significant portion of participating towns' wetlands has been protected, it is not possible with present available information, to determine the size, development potential, value, or ecological significance of restricted wetlands. Thus far, approximately 40 petitions have been filed with the Superior Court to determine whether the restriction is equivalent to a taking. Less than six of these have been settled, all out of court. In no case was there a decision on,whether or not taking had occured. Instead, the cases were settled because the petitioner withdrew his appeal, an error on the 1In 22 coastal towns, 8.4 percent of the towns' land area is restricted coastal wetlands. In-8 inland towns, 6.5 percent .of the towns' land area is restricted inland wetlands. -216- part of the program administrator was recognized, and corrected, 1 etc. Whether restrictions and inv erse condemnation could be applied to farmland as it has been to wetlands is an open question, at least in Massachusetts. Farmland is more readily developable than wetlands, and therefore, the loss in value because of restrictions would be greater than for farmland. This difference suggests both that there would be relatively less political support for passing a restriction and inverse con-demnation bill applied to farmland and that if enacted and implemented, such a program would generate many more petitions by landowners to determine whether their land had indeed been taken without compensation. Information provided May, 1977 by Paul Grongen, Legal Counsel, Wetlands Restriction Program. -217- C. Transfer of Development Rights Thelconcept of the transfer of development rights has produced a voluminous literature, but to date very few commun- itie s have instituted legislation on transferable development rights -- particularly for extensive semi-rural or developing areas -- and only a handful of transfers have yet occured. Two basic types of TDR ordinances have been worked out so far with intermediate types occasionally introduced.. One is a pure TDR arrangement with sale of development rights from land owners in the no-growth zone to developers in the growth zone in a market-type situation. Buckingham Township in Bucks County, Pa. has this sort.of ordinance but.there has only been one transfer so far. 1. The town of Southampton in Suffolk County, New York, has a similar ordinance but it has never been used. 2 Eden near Buffalo also has recently adopted a town-wide TDR system as part of its zoning ordinance. 3 And similarly, the Sunderland, Massachusetts.Zoning bylaw allows for voluntary transfers of development rights from prime agricultural land See Bennett; the appropriate sections of the Zoning Ordinance are Art II, Sec 216, Art III, Sec 304, Art V, Sec 502, and Art VI. 2See Bennett and the.Southampton Building Zone Ordinance No. 26 Sec 2-10-20, and 2-40-50. Emanuel. -218- to an "Open Space Community," a planned unit development@l The other type of ordinance is really a variation on planned unit development. In this case a land owner may trans- fer development rights. fromone parcel to,another (he must own both), thereby preserving open space in one area and build- ing at a higher density in another. Chesterfield Township in 2 Burlington County, N.J. and Hillsborough@Township in Somerset County,'N.J.3 have this type of arrangement. Collier County, Florida4 has an arrangement where land in protected ("special treatment"), districts, suchas coastal areas and marshes,can have its development rights transferred to an adjacent parcel not in this special,treatment-district. All examples of TDR ordinances in semi-rural areas which we have been able to find are voluntary: that is, the owner of land iA the no-growth zone has the option of either develop- ing at low density as allowed by the existing zoning or receiv- ing and selling his development rights certificates and not developing his land.. Few people,have chosen the TDR option. See Bennett, August, Gowen and MacKenzie and Sunderland Zoning by-law Sec 4400, especially subsections 4460-4463. 2See Bennett and Zoning Ord., subsections 329 and 701E. 3 See Bennett and Ord. No. 75-13, 1075, Sec 333 and 801. 4See Bennett and Zoning Ord Sec 9 (1974). -219- The very.newness of TDRs also means that ther e may need to be State enabling legislation before a local TDR ordinance can be adopted. Illinois' Historical Preservation Enabling Act and New Jersey Assembly Bill No. 31922are examples of this. d. Development Permit Systems Development permit systems have been instituted in Cal- ifornia, Florida, and Vermont. Here we review briefly the Cal- ifornia and Florida systems-and report our own research, which was concentrated on the Vermont program. i. California: Coastal Commissions. Since 19653, the Bay Area Conservation and Development Comm- ission (BCDC) has regulated development along the shoreline of San Francisco Bay. In 1969 the Commission completed its con- servation and development plan and was given permanent permit power by the legislature to implement it. Based on this model, six 12-to-16 member regional coastal commissions were set up in 1972 by the state. They were charged with preparing a plan by 1975 for the conservation of each coastal zo ne, which was broadly defined to extend from 3 miles out to sea to the 1 Ill. Rev. Stat. Chap. 24 sections 11-48. 2-1 et. seq., 1971. 2 1975. This bill failed to pass and will probably be reintro- duced in 1977. -220- highest elevation of the nearest coastal mountain range. In some sections this distance extends 5 miles inland. During the period of plan preparation, the Commissions were given the power to veto or modify all forms of development in the water area of the zone and in the adjoining 1000-yard strip of lan d. Almost all construction, dredging, filling, and discharge are covered, with exemptions made only for maintenance of existing naviga- tion channels and minor (less than $7500) improvements to single family houses (Healy). "In deciding on permits, the commissions would have to find that a development would have no substantial adverse en- vironmental effect' and would be consistent with "the mainten- an ce, restoration, and enhancement of the overall quality of the coastal zone environment, including, but not limited to, its amenities. Developments must also be consistent with the 11continued existence of optimum populations of all species of living organismst' and the avoidance of "irreversible and irret- rievable commitments of coastal zone resources 11 To make the permit process even more stringent, a two-thirds majority of a commission (membership not just attendance) would be required to approve dredging or filling of estuaries or bays, developments on agricultural land and those that would reduce California Public Resources Code Sections 27402 and 27302. -221- the size of a beach or interfere with access to the water, and certain other types of projects". (Healy, p. 71). The members of the commissions were to be evenly divided between representatives of.local (county and municipal) govern- ment and "public" members appointed equally by the governor, senate rules committee, and the speaker of the state assembly. A state commission was set up over the regional commissions as an appeal body. In August 1976, the state legislature passed a bill aimed at preserving coastal ecology, concentrating development in existing urban areas, and guaranteeing public access to the coast. The bill made permanent the State Coastal Commission, and extended the lives of the regional commissions for two years, during which time local governments are to make their plans and zoning ordinances.conform with the standards and policies pre- scribed in the state legislation. After local plans and ord- inances are intconformance, regulation will be done by local governments which are to grant permits only to those projects that conform to state standards and policies. ii. Florida: Developments of Regional Impact In Florida, a permit system was set up at the level of local government by the 1972 Environmental Land and Water -222- Management Act (Healy pp. 102-138). "Developments,of regional impact" must be approved by local government which issues a permit called a "development order." only very major-projects qualify as developments of regional impact. They include, for example, airports, power plants of over 10OMW, hospitals serv- ing more than one county, shopping centers of over 40 acre,s, manufacturing plants or industrial parks with more than 2500 parking places, housing developments of over 250 units (in the least@populous counties or of over 3000 units in the most populous ones). A developer planning a development of regional impact (DRI) must apply for permission to the local government. The appli- cation forms asks many questions about the environmental, eco- nomic, and fiscal impact of the proposed project and the com- pleted application may run to hundreds of pages. The developer must also submit a copy of his application to the regional planning agency. The regional agency has 50 days (only 30.days up until 1974 when the requirement was changed) to review the application and make a recommendation. Local government must only "consider" the regional agency's findings and recommenda- tion and can ignore them altogether. The developer may appeal the local government's decision. The regional planning agency -223- or the division of state planning has the right to appeal to the Florida Cabinet. Ifa local government objects to a project lying within another city or county, it cannot appeal itself but must persuade the regional planning council to carry, and pay for,an appeal. Private citizens have no right of appeal. "Thus, Florida's DRI process is a mixture of regional evaluation, local control, and state review. The process takes place under rules drawn up by the state, and the division of state planning is kept informed of the progress of each DRI application. But until an issue comes to the cabinet on appeal, the state remains in the background. The regional council is directly involved from the start, but its power, except for the appeal power, is'Ione of persuasion rather than compulsion." (Healy p. 121). iii. Vermont's Environmental.Control Act (Act 2502 Vermont's Environmental Control Act (Act 250) was adopted in 19.70 and amended in 1973. The law calls for a three-stage planning process and for a permit system to screen most sub- division and development with reference to criteria contained in the law. The law created an Environmental Board of nine members, to be appointed by the Governor, and charged the -224- Board with adoption of the plans and administration of the, permit system. Nine (later reduced to seven) district en- vironmental commissions were established, whose members are appointed by the Governor. The planning process was to be marked by adoption of (1) anInterim land capability and development plan, (2) a capabil- ity and development plan, and (3) a land use plan. The first two plans were adopted by the Board, the Governor, and in 1972 and 1973 respectively, by the General Assembly. These two plans map and describe resource areas, including primary and secondary farmlands, but do not make specific use recommendations. The third pland, the land use plan, would have established five categories of use districts but was rejected by the General Assem- bly in 1974. The present administration has had legislation in- troduced which would repeal the state land use planning require- ment of Act 250, and the people interviewed for this study agree that there is a widespread expectation that this repeal provision will pass. The permit process (Figure 5-3) applies to subdivisions of more than 10 lots, construction of more than 10 housing units, development of coti ercial or industrial property of more than one acre, and all construction regardless of size at altitudes Figure 5-3 THE VERMONT ACT 250 PERMIT PROCESS SCS, County Forester and other Technical@Advice IMunicipalit Citizen dvice Adv State Agencies Agency for jApplication- District Commission Environmental Conservation Municipal and Regional.Planning Qn Commission District-Commission Findings of Fact and -Conclusions of Law Appeal to APermit Granted@_l Environmental @irmei Board Appeal to Permit G Supreme + ]Approved 0 s I I court ith Option@s ]with Conditionsr e] i$__tr::iC: Removal t L F unty Co Fle -ver s e i Permit Denied IC 0 @�rtl -226- of over 2500 feet. Application for permission to develop must be made to one of seven District Environmental Commissions, which must listen to recommendations by the state Agency for Environmental Conservation and the local municipal government and planning commission. The District Commission issues findings of fact and conclusions of law following a public hearing, and then grants a permit, grants a permit with conditions, or denies a permit. Appeal is to the state Environmental Board and beyond that to the Supreme Court. Subsection 9(B) of section 6086 of the act states that a permit will be granted for the development or subdivision.of primary agricultural soils only when (1) the development or. subdivision will not significantly reduce the agricultural' potential of the primary agricultural soils; or else (2) the applicant can realize a reasonable return on the fair market value of his land only by devoting the primary agricultural soils to uses which will significantly reduce their agricultural potential, and the applicant has no other land reasonably suited for the development. The development must be designed to minimize the reduction of agricultural potential (by using such devices as cluster planning) and it must.not significantly interfere with or jeopardize the continuation of@agriculture -227- on adjoining lands or reduce their agricultural or forestry potential. The Environmental Board has interpreted the rather lengthy definition of primary soils found in the legislation (Section 6086) to "include lands suitable and economically viable for dairy farming and adaptive crops. Under the Soil Conservation Service land classification system, this definition would include Class I, Class II and Class III lands." As of January 1, 1977, 2,542 applications for permits had been filed with District Commissions under Act 250. Of these, 2,277, or 90 percent have been granted or granted with conditions. Only 66 were denied; of the remainder, 113 were withdrawn prior to a decision, and 86 were still pending. Most were settled by District Commissions, but 78 applications were appealed to the Environmental Board. Of the 41 appeals acted on by the Environmental Board, 36 were granted permits, usually with conditions,, and 5 were denied permits. In order to focus on the permit experience as it relates to prime farmland, all of the District Commission files were examined which were known by Kenneth Senecal, the Executive Officer of the Environmental Board to contain discussion imemorandum of Environmental Board, June 14, 1973. -228- pertaining to agriculture. Only eight files were known. Most files say nothing at all about the productivity of the soils, and contain no findings as to the primary soils criteria. Therefore, the eight cases are highly atypical in that the quality of the land was a subject of discussion at all. Generally the decisions give little weight to the re- tention of agricultural land. In one case the tract was I'not considered prime agricultural or forestry land due to its topography and the fact that it is broken up by a road and natural features"; in another, the "agricultural soils on the site do not constitute a major portion and could not be considered a viable farming unit;11 and in a third "through having primary agricultural soils". the extent was not con- sidered enough to outweigh the fact that the city of South In the recollection of this officer, there are also only afew instances in which Act 250 has been applied specifically in order to preserve land of special environmental value. Con- ditions have been attached to a permit granted inWhitingham, which requires that development be designed to avoid Ryder Pond bog, and a permit granted in.Cabot requires that a duck resting area be protected. In addition, there may be a dozen instances of relocating buildings from the skyline, redesign- ing ar@!hitecture to fit the surroundings, or requiring tree planting. -229- Burlington had zoned the tract industrial as the highest and best use. In granting permits for three of the cases, a min- imal condition was imposed requiring that the land be grazed or the hay mown annually (in one case until the last lots were sold and in another "to reduce the risk of fire"). In only one of the eight cases (Hillwinds case, File no. 2WO302) did the District Commission deny a permit for devel- opment, noting that the development would have an adverse effect on natural beauty and would cause a reduction in agri- cultural potential, and showing how the applicant failed to .meet each of the criteria of subsection 9(B). This sole effort by a District Commission to protect prime farmlan d was not destined to survive the appeal process, and for a reason which illustrates vividly the need for precision in the statutory definitions. The Environmental Board hearing is denovo as to any findings of fact challenged by any party. The Windham Regional Planning and Development Commission chose not to appear on the aesthetic issue, for which it had the burden of proof, so that aspect of the findings was not sus- tained. The applicant bore the burden of proof as to criteria of subsection 9(B), and the Agency of Environmental Conservation anticipated calling a soil technician of the U.S. Department of Agriculture's Soil Conservation Service (S.C.S.) in rebuttal. -230- Prior to the hearing, however, the State Soils Scientist of the S.C.S. notified the Chairman of the Environmental Board that he would not allow the soils map of the owner-cooperator's land to be used in the case because of potential inaccuracies. This stand by the S.C.S. caused the Agency of Environmental Conservation to withdraw and led to a granting of the permit. The Environmental Board's findings of fact stated: "Although the soils within the area may have some agricultural potential, the presence of rocks would make cultivation with modern farm equipment impractical. Removal of rocks for farming purposes would not be economically feagible." The Environmental Board subsequently has requested the S.C.S. to specify which of its maps may present some problems. A partially responsive letter of July 14, 1976, describes the limits of testimony which S.C.a personnel may give at District Commission hearings but does not refer to map accur- acy. It is apparent from the letter that the S.C.S. will limit its role to-provision of basic soils data and is deter- mined not to become involved in economic, political, or reg- ulatory aspects of agricultural land use. One suspects that it was the absence of guidelines for its personnel at the time of the Hillwinds appeal that led the S.C.S. to bar reliance on -231- its maps. In the absence of other soils maps or of more specific statutory definitions, however, its action has hobbled the state. These cases reflect two contrary circumstances. Except for Hillwinds, the sellers of lots or parcels for residential purposes appeared to be people who had been unable to earn a good living by farming and who proposed to sell off their principal and possibly sole substantial asset. The two indus- trial park cases reflect the desire to promote job opportunities where location makes it feasible. In both situations farm preservation did not warrant serious consideration when com- pared with economic imperatives. Unless the market for milk increases substantially or the,price of land for rural res- idences declines, there would appear to be little reason to expect more than lip service to be paid to Act 250's goal of preserving high quality farmland. None of the people interviewed believes that Act 250 has been or will be an effective means of preserving prime farmland. Senator Keith Wallace, former Director of the State Farm Bureau, noted that many people avoid Act 250 by subdividing a few lots at a time or by creating lots in excess of 10 acres. Neither Senator Wallace nor Darby Bradley of the Vermont Natural -232- Resources Council saw any prospect for passage of the state land use plan and commented that this forces the District Commissions to respond on a case-by-case basis. Kenneth Senecal sums up ,the problem as follows: "First of all, I believe that Act 250 is in a position to regulate such a small portion of the development that occurs on prime agricultural lands that it really does little to protect agricul- tural lands as a resource. Secondly, the present economic disparity between the value of lands for agriculture and other uses in Vermont makes it very difficult unless there is a comprehensive State program which would include incentives for farming and removing of,dis- incentives, such as taxing farm lands at their fair market value. Thirdly, insofar as Vermont's commitment to save agricultural lands, there certainly is a substantial emotional commitment as demonstrat6d by the fact that Act 250 purports to regulate the uses of Agricultural lands. My use of the term commitment is probably inappropriate in that respect. Perhaps it should be more precise in pointing out that Vermont does not have any effective comprehensive program designed to save agricultural lands even though it has many individual programs which exist because of concern that agricultural lands are being diverted to other uses, and that in the long term this will be deterimental to the interest of the State of Vermont." -233- B. Experience with Indirect Controls 1. Experience with Tax Incentives a. Differential assessment for property taxation Differential assessment of farmland for property tax purposes has been adopted by at least 44 states, twenty of which also con- sider forest lands eligible for differential assessment and fifteen of which provide comparable treatment of lands with critical na- tural, scenic, and historic qualities. As noted in the general discussion in Chapter IV, there are three general types of differ- ential assessment: Preferential assessment, with no sanctions for a participant who takes his land out of an eligible use, 2) de- ferred taxation, which requires that several years' worth of back taxes on the difference between market value and use value be paid if the land is taken out of an eligible use, and 3) restrictive agreements, in which the landowner must contract to keep his land in an eligible use. These are summarized in Table 5-11,which is updated from RSRI1s detailed report on differential assessment, Untaxing Open Space. Because of the depth with which the previous RSRI study (and studies by Hady and Siebold and by Goudemans) have treated Note that some states are in more than one category since they have more than one differential assessment law. Table 5-11 R' 1977 PROVISIONS OF STATE DIFFE ENTIAL ASSESSMENT LAWS) Kt-st r ic Li VC Pury rrefarenittal Aggestrisent P*ferryd Taxation Z 0 2 a j ow 34 C, 0 0 Pros"R I . I t Year of enectatent G7 69167 68159, ?lid, 6717 5187 17 3174 6717311 F1 163 161,73170 10 176 17115617316.7,169 731 74 175,72,04 171 71 173174163166174168 15 16 11; 19 IN Eligible Uses - I I I I I A8 ultur: 0 0 0 0 at 10 0 la 19 0 a 0 0 0 at & 0 *1 0 1 0 0 0 0 0 a 0 0 0 0 9 0 # I - I st Ttaster or rorONC V 0 ,@,Iq ... VWrr. FrotectTon 0 Rgyreatten "ditional Eligibility RealtireaMt. 0 40 a a 0 0 min. Yam In-t Required -i - -- red a 9 0 to 0 0 0 "ism 01 - 1--d for EltRible Use =,I, mz:" It", ZP.nn.d for Eligible Use Sanctions on Conversion 5 4 to Rollback Tax#& (j2l cTt.*d tne. of yrs.) Lo _L 2 4 IDAJ2 4 3 7 4 5 7 21 5 Is r err!@ Inttrest on xus rictive --i!Vo of yrs:) r Scope -T. AL -t.�- -t -i- Local OpLio o 0 01*Fe --i-!- vt-or-oli- ii:'! i i 0 vol,nktsry@ 0 0 0 11129fre 411 # # AUt.MtiC for lhiplpigcaailion Ft State Subvention paymenes Provided to 0 is f at Revenue Loss 101 1 LL i Indicate, 1h:.t,'there 1.8'a total r.11-b of do f red ta"a SOURCE: Updated from Regional Science Research Institute, Untaxing Open S2ace, Washington, Council in Environmental Quality, 1976. 0 0 0 @7 0 at 0 to 0 10 tx 0 0 001 @00- 0 0 00510, 0 at -235- this topic we shall not attempt to report on experiences with differential assessment on a nationwide basis. Rather we will look at the application and use of differential assess- ment in two regions: the area around Chicago where farmers have participated in Illinois' deferred taxation program and the State of California which has a restrictive agreement type of program. These two regions are subject to substantial urban pressure and moreover, both have been the subject of detailed quantitative analyses of participation. However, no claim can be made that they are typical although the results of the studies of these regions are in agreement with the general findings in Untaxing aen Space and in Gloudeman's work. i. Illinois' Differential-Assessment Program: The Chicago Area. 'Ingolf Vogeler of Northwestern University has completed a study of participation in Illinois' voluntary deferred tax- ation program in Cook, Du Page, Lake, and Kane counties near Chicago for the year 1973. There is substantialvariation in the degree of urban pressure over the study area. By 1973, 2,676 individuals were enrolled in the program in these four counties accounting for a total of 359,074 acres of farmland -236- (35% of all land in the counties or 79% of all land in farms). The assessed valuation of this land at fair market value was $316,230,433 while, under differential assessment at agri- cultural use value, the land was assessed at $106,506,661, a reduction of some 64%. This resulted in a tax shift of $12,515,571 in 1973. Of the land included in the program about 52% can be classified as "prime", defined by Vogeler using General Soil Maps of each county as those soils whose productivity index was at least 110 under high management. The landowners par- ticipating have the following characteristics: 75% owned farms smaller than the average size farm in their-country, 79% op- erated cash grain farms (with 6% or less each operating live- stock farms, dairy farms, specialty crop farms, or horse farms), 60% were farmers, and 72% resided in the same county that their land was located in. Thus, the beneficiaries of the pro- gram tend to be small cash grain farmers living in the same county that their'farm is in. Some understanding of factors affecting participation in these'four counties can be gained by examining the correlation presented below based on 50 townships in the four study coun-! ties. -237- Table 5-12 CORRELATIONS BETWEEN ACRES OF-DIFFERENTIALLY ASSESSED LAND PER SQUARE MILE (1973) AND VARIOUS CHARACTERISTICS OF TOWNSHIPS IN THE CHICAGO AREA* Correlation Township Characteristic Coefficient Housing units per square mile -.53 Land in.farms per square mile .82 Acreage of total crops harvested per square .79 mile Ratio of fair cash value per differentially assessed acre to agricultural value per differentially assessed acre -.03 Assessed fair market value as % of assessed agricultural value -.05 Fair cash value per differentially assessed acre -.16 Agricultural..value per differentiallk assessed acre -.16 E.stimated.travel time to downtown Chicago -.03 based.on 5Q townships Source: Vogeler The correlations indicate that townships with greater urban development tend to have a lower proportion of assessed land, as one.might expect. There is less eligible farmland in these municipalities and.there are stronger indirect effects of urbanization which discourage farming and encourage land speculation. Conversely, townships with a greater proportion of land in farms and with a.greater proportion.of land in cropland harvested tend to have higher participation in in thedifferen- tial assessment program. -238- Measures of assessed faircash value and agricultural use value are uncorrelated with acreage of differentially assessed land per square mile in 1973. This would suggest that par- ticipation is not primarily dependent upon a high fair cash value assessment but upon other reasons. And finally, there does not appear to be any relationship with participation and distance to downtown Chicago. This surprising result may be due to a discrete variation in the effect of distance on participation -- once one is beyond a certain distance from Chicago agriculture generally takes place extensively, but at distances closer to Chicago there is little or no agriculture at all. Unfortunately Vogeler did not give correlations of township characteristics and acreage of differentially assessed land per acre of farmland. Such a correlation analysis would allow us to draw stronger conclusions. ii. Californi&'s Land Conservation Act. The California Land Conservation Act of 1965 (also known as the Williamson Act) is a restrictive agreement type of diff- erential assessment. Local governments may delineate agricultur- al preserves on their own initiative or by request from private landowners. An individual landowner of eligible farmland in a preserveIcan then voluntarily enter into a contract -239- with the local government in which the land owner agrees to 1 keep his land in the eligible use for ten years in return for differential assessment of the land. The contract is automatically renewed for an additional year every year unless the participant gives a notice of nonrenewal. Notice of non- renewal is followed by a gradual increase in tax assessment over the next ten years from use value assessment to market value assessment. The contract may also be cancelled, but there is a fee equal to 12k% of the cash value of the land. Withdrawls account for less than @ of 1% of the land enrolled, however. A number of studies of California's restrictive agreement program have been carried out (Fellmeth, Gustafson and Wallace, Keene et al., and Hansen and Schwartz, for example). All tend to agree that the program, although including a great deal of land, is not especially successful at preventing urbanization of farmland. Statewide participation is summarized in Table 5-13. Most of the participants are located in the Central Valley where most of the agricultural land is. However, no land is Eligible uses are agriculture, recreation, open space, or a use compatible with these categories. -240- Table 5-13 PARTICIPATION IN CALIFORNIA'S LAND CONSERVATION ACT* Participating Total Acres Prime Acres Year Counties in Program in Program 1976-77 47 15,027,000 4,557,000 1975-76 46 14,427,000 .4,371,000 1974-75 46 13,742,000 4,140,000 1973-74 45 12,719,000 3,915,000 1972-73 44 11,440,000 3,428,000 1971-72 42 9,563,000 2,620,000 1970-71 39 6,273,000 1,654,000 1969-70 37 4,252,000 5733@000 1968-69 23 2@0629000 131X0 Sources: Gustafson and Wallace, and Han.sen and Schwartz, and Resources Agency, Department of Conserva- tion, State of California. -241- enrolled in Merced County, which has no local program. In addition, Imperial County, which is a major agricultural county in'the southern part of the state also has no program. Gustafson and Wallace have observed that the pattern of participation is such that: 1) near urban areas there is little land enrolled in the program; 2) the coastal areas of the state exhibit very low participation rates; and 3) the lack of plan- ning for agricultural preserves has led to scattered and non- contiguous inclusion of land in the program. The lack of par- ticipation around urban areas is due to over-optimistic expec- tations about the development potential of the land by land- owners on the rural-urban fringe (Hansen and Schwartz). Hansen and Schwartz calculated that under more realistic views about land values and development potential it would be economically worthwhile for most landowners on the rural-urban fringe to participate and receive a tax reduction, even though they must enter a contract for At least ten years. b. Experience with Differential Valuation for Federal Estate and State Inheritance Taxation. It is less than a year since Congress 3pproved the new procedures which allow farms to be taxed at farm use value and allow payment of estate taxes to be spread over a number of years. Therefore, it would seem to be too early to attempt -242- to assess the effectiveness of the new Federal provisions. Because of the time and budgetary constraints of Phase I of this research, it has not been possible to determine which states now allow use valuation of farm or environmenta lly valuable lands for state inheritance taxation. -243- 2.' Experience with Tax Disincentives a. Capital Gains Tax Heavy capital gains taxes on real estate were introduced in England as part of the 1909 Housing and Town Planning Act, and were in effect until 1947 when development rights were nationalized. The British Land Commission Act of 1967 rein- troduced the concept and distinguished between increases in existing Use value, which were taxed at standard capital gains rates, and increases in development value, which were taxed at 40 percent. The tax was later repealed. Somewhat similar taxes were instituted in other English speaking countries -- Australia, New Zealand, and Canada; the intent of the Australian tax was to return to the public some of the public costs of infrastructure which resulted in the rise in land values, while taxes in New Zealand and Canada (in Ontario) were specifically aimed at land speculators (Hagman and Mis- czynski, 1975). The first tax of this sort to be enacted in the United States is the Vermont land gains tax of 1973 (Act 81) (Baker). A similar tax was proposed and narrowly defeated in Montana in 1974. In 1975 a bill (House Bill 502) providing for a 50% tax on sales of land held less than a year was introduced in the state of Washington. Under the proposed Washington legislation -244- the tax rate would drop slowly, declining to 25% for. land owned for over four years. one novel feature of this bill is that a one percent increase in the cost basis would be allowed for each month the land was held. More important for the purposes of this study, is the provision that sales of land which had been actively farmed would be exempt from the proposed tax (Hagman and Misczynski). The Vermont land gains tax is expressly designed to dis- courage land subdivision. It applies to land only, not to build- ings. The site of a principal residence up to five acres (and up to 10 acres where local zoning requires) is exempt. The tax rate is based on a sliding schedule, with short term holders heavily taxed and those who hold land over six years.not taxed at all. The tax rate also increases with the percentage gain. (Table 5-14,,). The highest tax rate is 60% on the capital gain for land held less than one year whose value increased by 200% or more. Taxes are due at the time of sale and are payable in installments if the sale is an installment sale. The constitu- tionality of the tax has been upheld by the Vermont Supreme Court (Andrews v. Lathrop, 132 Vt. 256, 315 A. 2nd 860 (1974)). Since it has been instituted, the following amounts of revenue have been raised by the tax: -245- Table 5-14 TAX RATES ON CAPITAL GAIN: VERMONT LAND GAINS TAX Gain, as a percentage of Cost Basis Years Land Held by Seller 0-99% 100-199% 200% or more less than I year 30 45 60 1-2 years 25 37.5 50 2-3 years 20 30 40 3-4 years 15 22.5 30 4-5 years 10 15 20 5-6 years 5 7.5 10 6+ years 0 0 0 -246 Fiscal Year Revenue Raised 1973-1974 1.3 million 1974-1975 0.8 million 1975-1976 0.8 million 1976-1977 (est.) 0.8 million In contrast, total property taxes raised in the state during fiscal 1973-1974 were $109.6 million. I The first $500,000 of land gains tax revenues are being used to f inance a statewide mapping program, the rest is being used for local property tax relief. Revenue raised by the tax has been considerably below ex- pectations, but since the first year of the program, subdivision activity has slowed down considerably. Although one cannot be sure how much of this reduction in subdivision activity is due to the tax and how much to the reces.sion, there are indications that the recession, which especially affected the second home market, was the major factor. Norris Hoyt, the original sponsor of the Land Tax Bill in the legislature stated "we thought the tax would result in sellers taking their land off the market, however, what has happened is the farmer cannot find a buyer for his land." Despite its theoretical advantages, our basic feeling, supported by our interviews, is that the Vermont Land Gains Tax is not a very effective method for preserving farmland in develop- ing areas. This is for three reasons: I From U.S. Bureau of the Census, State Government Finances. -247- 1) Because of the declining rate schedule, the tax does not affect long-term investors in farmland. This kind of in- vestment is very important since many persons consider invest- ment in land as a long-term "hedge" against inflation. 2) The tax does not affect farmers selling split-offs, again because of the declining rate schedule. Selling split- offs is, of course, desirable to the farmer because it brings him needed cash. However, in the long-run urban activity in rural areas may create situations that interfere with the viabil- ity of farming. 3) The quick subdivision of farmland probably would not be significantly affected. This is because in a highly lever- aged market the big profits are still left. A simple example will illustrate the last point. Suppose a speculator buys a farm for $100,000,subdivides it,and sells it.in a year for $200,000. The sale will be subject to a 45 percent tax, leaving a $55,000 profit -- a 55 percent rate of profit instead of 100 percent. Now suppose the speculator put 29 percent down when buying the farm with interest payments only during the next five years, and a balloon payment for the balance of the princ- ipal at the end of the fifth year (a common practice, see Linde- man). In this case, the speculator would make a $55,000 profit (after taxes) on a $29,000 investment -- a 190 percent rate of profit. -248- 3. Experience _with Agri.cultural Districting New York's Agricultural Districting Program is the best known example of agricultural districting. Under the New York law (Bryant and Conklin, 1975) an agricultural district is a legally bounded region of at least 500 acres in which agricultural land uses predominate. (It should be noted that not all the land in a district is necessarily farmland; non- conflicting uses may be incorporated to preserve continuity. Furthermore, the district boundaries are subject to review every eight years). Within An agricultural district there are five types 6f benefits which can mitigate some of the spillover effects of urbanization and of non-agricultural neighbors. These are specified in the state's Agriculture and Markets Act. 1. The option to apply for differential (i.e. agricultural fruse value") assessment if certain production requirements are met. 2. Prohibition of local regulations in agricultural dis- tricts which "would unreasonably restrict or regulate farm structures or farming practices...unless. such restrictions or regulations bear a direct relationship to the public health or safety." 3. Encouragment of state policies oriented toward -249- maintenance of viable farming in agricultural districts..." 4. Review by the State Commission on Environmental Con- servation ofa) local exercise of eminent domain which would ac- quire land or interest in land in agricultural districts, and b) the intention to advance public funds "for the construction of dwellings, commercial or industrial facilities, (or) water or sewer facilities to serve nonfarm structures..." This does not give the Commissioner power to veto such acts but only to ensure that al- ternatives are fully explored. 5. Prohibition of assessments or taxes on land used pri- marily for agricultural production in agricultural districts for special districts for sewer, water, lighting, or for nonfarm drainage, except on land on which a farm dwelling or nonfarm structure is located. Thus within an agricultural district farmers are protected against some important spillover effects but are not prohibited from speculating in land or from converting their land to urban uses. The considerable cooperative effort involved in the process of forming a district, however, may lead to a strengthening of the corporate commitment to the continuation of farming and therefore to the effectiveness of the program. Participation in the Districting ?rogram is voluntary and requires considerable initiative by farmers; the complexity of creating an agricultural district as prescribed by the law is -250- summarized in Figure 5-4. It is evident from the Figure that- the law is designed to place responsibility for initiation of a proposed agricultural district in local hands and to incor- porate as much public participation as possible through public hearings and actions of the County legislature. The State reviews all proposed districts and may take modifications if the intent of the law is not met by a proposed district. The process of forming a district takes from six months to a year and requires that maps of the district boundaries be prepared and that petitions be obtained from enough land owners in the .proposed district so that the minimum size and land use require- ments are met. Participation in the program from its inception in late 1971 has been high. See Table 5-45 and Figure 5-5. Although there does appear to be a tendency for greater participation in rapidly growing non-metropolitan counties (Table 5-16) a Kruskal- Wallis analysis of variance is significant at only th e .30 level. (There does not appear to be a significant relationship between participation and soil quality either -- the Kruskal-Wallis analysis of variance of the approximate proportion of farmland in districts across counties classified by proportion of land in SCS Classes I and II is not significant at the .20 level. See Figure 5-4 PROCESS FOR FORMING AGRICULTURAL DISTRICTS IN NEW YORK THE PUBLIC T1M COUNTY LEGISLATURE COUNTY AND STATE AGENCIES Coun y 0 County Planning Board: Legisl ture 1. receive proposals recommendations Farmers initiatel 2. receives proposed proposal mod 4fications (D FAgr. -Dist. Adv. Committee: 3. sets up public hearings makes recommendations Public hearing on proposals and proposed modifications and recommendations County Lep-islature Adopts or rejects Agric. Resources proposed aaric. dist. Comm: recommenda- tions on agric. kn .and/or modifications Commissioner Ct viability of land 90 1 of Environ. i Ct J Conservation: co if a "plan" Modifies, 14 Certifies, WSecretary of adopted or Rejects State: compares ag. district with state plans, Certification by State policies County Legislature kablic hearings (optional if no new Approves or rejects district after public modifications). hearing ounty Le C Approves o!q distri ct a heari Agricultural District SOURCE: Keeze et al, 1976: 334. Becomes Effective Table 5-15 FORMATION OF AGRICnTURAL DISTRICTS IN NEW YORK, 1973-1976 Acreage in districts Number of Acreage in as a Proportion of Date Districts* Districts* 1974 Land in Farms August 1973 78 6120496 .065 January 1974 120 1$079,054 .114 February 1975 210 2,436,547 .258 June 1975 233 2,954,279 .312 June 1976 286 30941,675 .417 *Includes districts certified, reviewed by the State Agricultural Resources Commission, and under review by the Agricultural Resources Commission. Sources: New York State Department of Agriculture and Markets, Agricultural Resources Commission, and 1974 Census of Agriculture. Figure 5-5 PARTICIPATION RATE--.TN AGRICULTURAL DISTRICTS IN NEW YORK Ratio of Land in Ag. Districts in 01 1976 to Lana in Farms in 1974 June, negligible farmland 0 -.01 - .24 -U- .25 - .49 .50 - .74 .75 and over SOURCES: New York State Dept of 0 so Agriculture and Markets, Agricultural Resources Comm. Miles 1974 Census of Agriculture -254- Table 5-16 PARTICIPATION IN NEW YORK'S AGRICULTURAL DISTRICTING PROGRAM A. Median Participation Rates* in Counties Classified by Population Characteristics Median Number of Counties Metropolitan Counties Rapidly growing** .301 9 Slowly growing** .228 9 Nonmetropolitan Counties Rapidly growing** .681 8 Slowly growing** .351 25 All counties with Signi- ficant Agriculture .351 51 B. Median Participation Rates* in Counties Classified by Soil Characteristics Counties with less than 20% of land in SCS Classes I and 11 .301 27 Counties with between 20% and 35% of land in SCS Classes I and 11 .409 10 Counties with over 35% of land in SCS Classes I and 11 .441 14 Participation rate (acres of land in agricultural districts in,june 1976)/(land in farms in 1974). Rapidly growing counties experienced a population growth rate of 10% or more from 1960 to 1970; altother counties are slowly growing. Sources:: Same as Table'5-1 Plus U.S.D.A. Soil Conservation Service Inventory of Soiland Water Conservation Needs, 1967. -255- Table 5-16(B)). Thus in general it appears that population characteristics and soil characteristics at the county level are not sufficient to explain the pattern of participation. Interviews with ten cooperative extension service agents across the State and the study of minutes of fifteen public hearings on proposed districts have given us a better understanding of the pattern of participation, however. A4y one of three general- ly overlapping situations appears conducive tothe formation of agricultural districts: 1) Strong leadership. One or a few individuals may strong- ly favor the creation of a district because they wish to encour- age farming or because they wish to block regulation of their farming operations. This leader, who is often a farmer but may also be a county legislator or cooperative extensive agent, will undertake most'of the effo rt in persuading others to join the district, in carrying out the field work and in filling out the paperwork. 2) A crisis situation. In the semi-rural or remote regions of the State there are often proposed public projects or other public actions involving agricultural land which are sufficient to induce farmers and others to initiate a proposed district. Among the crises.which have led to districts are a proposed airport (Erie County), a proposed reservoir (Schoharie County), -256- a proposed power line (Wayne County), proposed enactment of local zoning and building codes which would annoy some farmers (Wayne County), and upward reassessment of property taxes on farmland (Orange County). 3) Anticipated mild urban spillover effects. In some cases the proposed district is formed to help create an atmosphere of re- lative certainty in which farmers can make their investment decisions or to help mitigate possible future nuisances. Very often this situation occurs in towns relatively remote from strong urban pressures. Several areas of the State are conspicuously lacking agri, cultural districts. Some remote areas, such as Schuyler County, have not experienced a crisis situation and have also lacked strong leadership to push the district through to completion. In addition, areas subject to rapid urbanization are either felt to be under pressures too strong to be ameliorated by agricultural districts or the prices being offered to landowners are too attractive for them to make the effort of forming a district. The area immed- iately surrounding New York City is an example large enough to show up at the county level. The fact that metropolitan counties do not in general show a higher participation rate in the pro- gram than nonme tropolitan counties suggests that the reluctance -257- to participate is, fairly common in portions of counties tn and near rapidly growing metropolitan area. Although the New York Districting program is the oldest and best known pro.gram to mitigate urban spillover effects on agri- culture,, many states have one or more of the elements of the New York program. But only a few have a set of provisions that is in any way comprehensive. The Oregon program to create exclusive farm use zoning districts has perhaps the most complete set of provisions. Essentially it includes all of the provisions of the New York districting program, but is likely to-be much strong- er in that it is designed to prevent development through the use of zoning. It also includes a provision for valuing farm prop- erty at farm use value for state inheritance tax purposes. The New York Agricultural Districting approach is compared with the Oregon exclusive farm use zone approach in Table 5-17. Table 5-17 COMPARISON OF NEW YORK AGRICULTURAL DISTRICTS AND OREGON EXCLUSIVE FARM USE ZONES IN MITIGATING PROBLEMS DUE TO NEARBY URBAN DEVELOPMENT Problems N.Y. Ag. Districts Oregon EFU Zone land speculation community commitment to keep restriction of urban land agricultural dev. to urban growth zones increased property taxes to pay for suburban oriented differential assessment differential assessment services estate & inheritance taxes rise valuation at farm value because land value rises EFU zoning for all good damage of crops by nearby in- min. size district farmland outside urban habitants growth zones prohibition of nuisance C@@o prohibition of "nuisance" or- ordinances if effects dinances unless a direct rela- onl .thin the EFU zone. regulation of farming practices tionship to the public health EFVzwolning restricts sub-- as nuisances to accomodate or safety. urban development to urban suburbanites growth zones. encouragement of state Statewide Planning Goals loss of farmers' status in po- policies oriented towards and Guidelines, espec- litical affairs to new subur- maint, of viable farming banites n agric. districts. ially No. 3 (Agricultural) & No. 4 (Urbanization) assessment on front-door basis for exemption in agric. districts exemption in EFU zones special utility districts except on land with farm dwell- except one area around ings or nonfarm structures farmhouse. provision of urban institutions, facilities & infrastructure in review by State Commissioner of projects of "statewide sig- rural areas by or with aid of Env. Conservation of nificance" must get permit state & local government a. local exercise of eminent from LCDC domain b. public funds for non-farm construction .on of urban development EFU zoning D J Chapter VI CHARACTERISTICS OF LAND USE CONTROLS AFFECTING THEIR ENACTMENT AND IMPLEMENTATION A. Introduction and Overview The variety of land use controls that we have descri bed in the previous chapter may give the impression. that there is little which can be said in general about land use controls. They ex- hibit a wide range of characteristics and can occur with numerous variations. However, the various controls can be described in terms of several underlying characteristics which provide points of reference for describing the potential results of a given program. A most general and important characteristic, whether the control is direct or indirect, provided the organizing principle for the previous section. In addition, three other character- istics seem to account for much of the variation among land use controls, at least as far as effectiveness in preserving open space or retaining farmland is concerned: the complexity of the controll the magnitude and distribution of the costs of the control,, and the degree of certainty with which the results of the control may be anticipated. Broadly speaking, any land use program must first be enacted, then once it is authorized must be implemented. Finally, once it is implemented, it may or may not prove effective. The three characteristics relate in general to all of these phases, (and certainly a legislator will give some thought to problems of -260- implementation and questions of effectiveness when addressing the question of enactment) but since each phase is involved with different problems and is dominated by different actors (legislators, bureaucrats, individual land owners, etc.) the meaning and relevance of each characteristic differs at each phase. Therefore, we have specified characteristics as they relate to enactment in Table 6-1 and as they relate to implementation in Table 6-2. (Explicit consideration of effectiveness will be withheld until the following chapter). The row headings of Tables 6-1 and 6-2 include the ideas of complexity, costs, and certainty in a somewhat disaggregated form and in addition list a characteristic which has to do with limitations on the extent of application. The controls are again grouped as direct and indirect. In general, it is reasonable to state that, assuming the general goal of preserving certain current land uses is agreed on, a proposed program is more likely to be enacted if it is intellectually simple or at least familiar from experience elsewhere, requires low costs of all interested parties, and if its results may be foreseen with reasonable certainty. Its prospects may be further enhanced if it protects current constit- uents at the expense of outsiders. Correspondingly, a program is more likely to be implemented -261- if there is little.doubt about its long term authorization, if it presents few novel or burdensome administrative pro cedures, and if, in the case of voluntary programs, the costs of partici- pation are minimal. It is difficult to come up with an ordinal rating for each land use control on each characteristic, but some general state- ments may be made which,h.elp explain the extent to which each type of control has been enacted and implemented. Differential assessment for property taxes is the most widely adopted program. It makes some'landowners better off, and it is difficult to identify the costs to other landowners. Although it does involve the somewhat novel and complex concept of use value, the determination of use value appears as a tech- nical problem which is to be solved by the tax assessor's staff and the results evaluated by the landowner before hedecides.to participate. Sanctions on withdrawing from the.program are usual- ly minor as compared with gains to be made by development. Like differential assessment for property taxation, diff- erential valuation for Federal estate taxes provides a benefit for farmers, but its public costs are difficult to identify. This measure was enacted in 1976 by the Congress, and a number of states are likely to follow. Exclusive farm use zoning has been enacted extensively in Table 6-1 CHARACTERISTICS OF CONTROLS RELATING TO INITIAL ENACTMENT (D) (A) (B) (C) EXERCISE OF RIGHT TO (E) DIRECT PURCHASE OF PURCHASE & SALE WITH PURCHASE & LEASE PREEMPT & SALE OR LEASE EXCLUSIVE FARM USE (F) DEVELOPMENT RIGHTS RESTRICTIONS WITH RESTRICTIONS WITH RESTRICTIONS ZONING. INVERSE CONDLM\ATION Intellectual Dev. rights an un- No unfamiliar con- No unfamiliar con- Concept similar toright Zoning a familiar Combines concept of complexity familiar concept 10 cepts. cepts. of first refusal in concept. regulation with pos- yrs. ago, but now private market. sible payment for becoming quite damages. well-known. Public Costs a. Payments Relatively low in Net costs compar- More capital need- Only purch. landwhich No payment to Depends an extent to to Land- areas of littleur- able to those for ed than for direct actually comes on mar- landowner. which landowners claim owner ban demand; ap- direct purchase of purchase of dev. ket; therefore, less damages and level of proaches fee value dev, rights. May rights, or purch. expend. than for direct awards made by court. in areas of high need more "up front" & sale since lease purch. of dev. rights Maximum possible cost demand. money since must makes possible or purch. & sale or similar to direct purchase full fee only slow amorti- lease. purchase of develop before selling re- zation. rights. stricted fee. b. Admini- Appraisals must Appraisals need be Costs of apprais- Minor administrative- Minor ordinary Minor administrative strative take into account made only of fee al and acquisition costs. Appraisal and administrative costs. Costs current use value; value; market will similar to those other administrative costs. N-1 otherwise admin. determine current of (B). costs similar to B or costs comparable use value at time of C. to those of ordi- sale with restric- Operating costs of nary land acquisi- tions. Few contin- "landlord" con- tion program. Few uing operat. costs. tinue. continuing operat- ing costs. If eminent domain If eminent domain Same as purchase Legal suits may lead Legal suit way Cost of legal suits. used, may be sub- used, may be subject and sale. to major costs. lead to major ject to Suit, re- to suit result. in costs. sulting in substan- substantial legal tial legal costs. costs. Private Costs Owner equally well- original owner fully Original owner Owner fully compen- Owner suffers any Owner suffers any loss off: exchange asset compensated; new fully compensated; sated at market loss in value; no in value unless he of developable land owner pays market lessor pays market price. compensation. sues and wins. for asset of money. price. rate. Uncertainty Assures sustained Same as (A). Same as (A). Same as (A). Zoning variances, Same as (A).- control once im- changes possible. plemented. Courts may find unconstitutional. Table 6-1 continued M (H) M DIFFERENTIAL VALUATION (L) PRIVATE TRANSFER OF DEVELOPMENT PERMIT DIFFERENTIAL ASSESSMZNT FOR FEDERAL ESTATE AND ACRICULTURAL DMLOPMENT RIGHTS SYSTIM FOR PROPERTY TAUS STATE INHERITANCE TAXES. CAPITAL GAINS TAX DISTRICTING intellectual Involves concept of Relatively simple Requires explanation of tame as (1). Concepts of capi- Concept of geo- -Complexity dev. rights, zoning.. to explain: de- what is meant by farm tal gains tax graphic district initial distribution velopment in cer- or other current use (cost basis, sell- where certain of rights, acqui si- tain areas re- value. ing price) famil- protections are tion of rights, use quires permit in iar. provided is not of acquired rights, addition to exist- difficult to ex- & market in TDRs. ing requirements plain. of zoning, build- ing code, etc. Public Costs a. Payments No public payments No public payments Tax expenditure only. Tax expenditure only. Payment by land- No payment to to Land- to landowner. to landowner. owner to (not by) landowner. owner public. b. Admini- Planning analysis Admin. costs of an Minor admin. costs: Minor admin. costs, Minor. Minor admin. cost: strative for distribution of additional board, determine eligibility, audit only. participants bear Costs rights costly. & staff or plan- appraise use value. much of organi- ning support for zational cost. W same. (If govt. sets as banker for rights, may have high costs.) Private Costs Developer has to pay Loss of develop- Tax benefit to parti- Tax benefit to par- Significant cost Benefits to par- for TDRE, b t is ment value of cipant; tax cost to ticipanL; tax cost to short-term ticipators, but allowed higher den- land. others. to others. owner, but not to participation sity. Compensation long-term owner. takes substantial to landowner in no- time and effort. growth zone may range from none to full. Uncertainty Value of TDRs un- Depends on deci- Tax benefit varies Benefit to individual Effect on location certain. Sustained sions of board. with composition of owner predictable, but of development not control likely, but tax base; effect on effect on maint. of clear. not as strong as land use depends on land use is not. deed restriction many factors. (i.e., as (A)). Table 6-2 CHA.RACTERISTICS OF CONTROLS RELATING TO IMPLEMENTATION ONCE ENACTED (D) (A) (B) (C) EXERCISE OF RIGHT TO (E) DI@IECT PURCHASE OF PURCHASE & SALE WITH PURCHASE & LEASE PREEMPT & SALE OR LEASE EXCLUSIVE FARM USE (F) PTCHTS RFSTRTCT10N.S VITH RESTRTCTIONS WTT11 RESTRICTIONS ZONTN'G INVERSE CONDE%NATION A.,@@in_-Istratille Difficulty in de- Relatively simple; Same as (B); mar- Must decide which pro- Usually specific Implemented simply Co-.-plexity termining fair purchase fee, market ket sets value of perties to purchase mapping requires in- by placing restric- value of develop- sets value of re- lease. Government when they come on the formation on soil tion on cerLaintypes ment rights; little sale. assumes long-term market. type, etc. Other- of land; may need market experience. landlord responsi- wise, admin. similar data on soil type, bilities. to that of ordinary etc. Settlement of zoning. May be sub- claims may belengthy. ject to continuing applications for variances & changes & by legal suits. Uncertainty Administrators Resale depends on Lease depends on Rate of purchase un- Fear that courts may Hard to predict how skeptical w,neth,,r market, which may be market, which may certain, but only find unconstitu- many landavners will sav2.r g ove- full uncertain. be uncertain. problem is if too tional. claim damages. fee purchase is many properties for Eufficirnt to given budget come on Justi also market. foresee Droblems of enfCrCe-1_Ent if rot a6ministered locally. 'lar to ar4-ns Usua Ily f-*xed Same as (A). Same as (A) but No unnecessary purch. Participation Simi CE b-,:.cgeL and h4@h need more "front" of propercies which limited only by po- costs; so appli- capital. do not come on market; litical feasibility cat-'on may be thus, effective par- of designating limited. ticipation rate (zoning) areas for greater than for (A), very limited dev. (B), or (C). Table 6-2 continued 0) (G) (H) DIFFERENrIAL VALUATION (L) PRIVATE TRANSFER OF DEVELOPMENT PERMIT DIFFERENTIAL ASSESSMENT FOR FEDERAL ESTATE AND (K) AGRICULTURAL DEVELOPMENT RIGHTS SYSTEMS FOR PROPERTY TAXES STATE INHERITANCE TAXES CAPITAL GAINS TAX DISTRICTING Administra- Difficult to de- Adds another level Requires estimate of Taxpayer prepares tax Data from property Substantial admin. tive termine no. of of govt. approval farm use value in addi- return based on esti- transfer tax syi- burden on farmers complexity rights to be dis- required of de- tion to market value; mate of use value; tem provided to de- in establishing tributed so that veloper. Implement- also continued surveil- government must audit. termine who must district. Many price will be ation is on a dev. lance to see that eli- pay capital gains farmers must come adequate. To proposal-by-propos- gibility requirements tax. Audit of tax to joint agreement. effect a transfer, al basis, so con- not breached. Otherwise return must check two private parties tinuous staffing is like ordinary property years owned, cost must come to an necessary and con- tax admin. basis, and selling agreement. tinuing political price. pressure can be ex- pected. Permit de- cisions difficult to make & defend unless land use plan has been approved. Uncertainty No. of TDR trans- Procedures similar No unusual uncertain- No unusual uncer- No unusual uncer- Eligible landowner actions will de- to zoning, but ties relevant. tainties relevant. tainties relevant. mey consider ad- pend on market only applied case min. burden ex- price of TDRs, by case as dev. cessive given un- which is difficult proposals are certainty of to predict. made. effectiveness. Ln I Limitations Depends upon market All land in de- Widespread partici- Widespread (100%) "Participation" Participation high on Extent of for TDRa. signated areas pation for preferen- participation ex- complete except in areas with Application must "partici- tial assessment & pected. to extent limited little development pate"; issue is deferred taxation, by holding period. pressure; limited stringency of but less widespread participation in permits issued. for restrictive fringe or suburban agreements, which areas. have stronger sanc- tions. -266-- several western states and in scattered other locations., In these locations, there has been relatively low development pres- sure and therefore potential losses to landowners because of zoning are relatively low. The general precedent of urban zoning is well known everywhere, but in some jurisdictions adopting exclusive farm use zoning there has been relatively little ex- perience with the shortcomings of zoning under development pressure and a confidence and willingness to set up a system of comprehensive planning and other controls which will compen- sate for the inherent weaknesses of zoning. None of the other types of programs has been enacted in more than a few instances. The cost of acquisition of development rights (by any of the methods outlined) has certainly been an important factor weighing against enacting programs relying on that method, as has been the concern that its introduction may throw in doubt the validity of existing uncompensated regulatory controls. The uncertainty and complexity of TDR has made it the delight of academics but has likewise caused it to be shunned by most politicians. The high private costs inflicted by capital gains taxes along with uncertainty concerning its effectiveness iin maintaining non-urban land uses have severely limited its application. -267- Elements of agricultural districting have been adopted one At a time in several states. Usually eligibility has been virtually automatic for farmers and has not entailed the organ- izational efforts which the New York program requires for farmers to participate. With these general remarks we leave Tables 6-1 and 6-2 for persual by the reader and turn out attention to a more detailed examination of some of the aspects of complexity, costs, and certainty. B. Complexity Land use controls, since they do impose constraints upon or intervene in the land market, may require the adoption of ideas and concepts to accomplish their ends that ate not reflected in people's common experiences. Thus, because of the intricacies involved in explaining basic concepts or new institutions in- volved in the program some controls may be considered intell- ectually complex; because of the difficulty of defining a basic concept operationally or establishing a new institution, some types of controls exhibit characteristics of administra- tive complexity. Intellectual complexity (or explainability) may be a particular problem for initial enactment, and administrative complexity may be of most importance for imple- mentation once enacted, but either aspect of complexity may lead -268- to problems at either stage. Intellectual, and administrative complexity are not absolute qualities. Precedent and familiarity can make relatively com- plex phenomena seem simple, while lack of experience can imbue a simple concept with inhibiting complexity. In that they have been observed by others, demonstration projects or exper- iences of any single jurisdiction are most valuable in dispelling or confirming the notion of complexity. We now examine the major aspects of complexity inherent in the definition and applica- tion of basic concepts and in the establishment of new institutions. 1. Definition and application of basic concepts Implementation of land use controls often involves the, definition and application of concepts which are instrumental to the whole scope of the program. These concepts may be basic to the justification of the program, to deciding which land is to be protected, or to determining the costs or compensation required by the program, for example. With respect to the land use controls under study here the working definitions of environ- mentally valuable land, prime agricultural land, and use value are the three most important concepts that are not given concrete meanings by existing institutions such as the land market on the rural-urban fringes. New, operationally useful procedures The idea of familiarityis also relevant to the third character- istic, certainty. It is discussed at greater length in the section on certainty. -269- are required to translate legislative intent into administrative action. a. Environmentally valuable land & prime agricultural land Protection of environmentally valuable land and prime agri- cultural land are the goals of many land use control programs. However, how does the planner know this land when he sees it? Planners typically need a solid definition of the concepts they work with so that the land that is supposed to be protected can be identified without endless arguments over what is meant by "environmentally valuable" or "prime". The definitions also have to be operational so that the criteria of environmentally valuable or prime can be easily applied to maps. At the extreme it is possible to make up formulas involving weighted sums of various landscape characteristics so that if the formula produces an index greater than some (arbitrarily) specified value then the land qualifies as environmentally valuable or prime. The problem with this approach is that it is too stilted; its inflexibility cannot possible incorporate all aspects of environmental value or all the characteristics of prime ag- ricultural land. The subjective judgments of the planners, legislators, and the public must be the ultimate arbiters of value or primeness. -270- That said, it is still possible to say generally what we mean by environmental values or prime lands, leaving the specifics to planners and others in each locale. Values (in- cluding the values of prime land) can be classified as follows [Berry, 1976b]: Aesthetic values, which refer to beauty with respect to the properties of a landscape and the overall composition, unity, variety, and vividness of the landscape (Sircello, Litton). Contemplative values, which refer to the recoll.e,ction of past visits to an area, anticipation of future visits, nature study in an area or about an area, or the pastoral ideal associated with rural life styles. Functional values, which refer to 1) taking advantage of the benefits produced by natural processes or natural con- ditions (such as aquifer recharge systems or prime soils) or 2) the avoidance of hazards inherent in natural process (such as in flood prone areas). With respect to prime soils in particular, Raup (1976) has emphasized that prime land must be defined taking into account hydrology, climate, physical soil conditions, consequences of land use for world food demand, access to markets, etc. -271- Recreational values, which refer, obviously, to passive and active recreational uses that could potentially be made of a particular area. And Ecological values, which refer to the idea that locally representative or locally unique plant and animal communities or associations should be protected not because they are of any utility*to people, but rather because non-human forms of life have a right to exist on the earth (Stone). As a practical matter, actually identifying valuable areas on a map usually involves identifying key indicators of these values and mapping their locations. Overlay maps provide a simple means of accomplishing this. McHarg's work as exemplified in Design with Nature illustrates the idea. In addition the review by Belknap and Furtado of the work of Hills, McHarg, and Lewis further illustrates various approaches. A somewhat more explicit and more comprehensive methodolgy is outlined by Lyle and von Wodtke which takes into account fairly detailed inter- action between human activities and natural processes. These approaches are more art than science, or at least it takes a skillful planner to use them well; it is not possible to make the identification of environmentally valuable lands subject to mindless application of rules by untrained and uninterested bureaucrats. -272- Identification of prime soils has generally not reached a very sophisticated state. Most common is simply the mapping from soil surveys of soil capability Classes I, II and possibly III and locally productive soils such as.muck lands in New York. Of course, this can provide only a broad overview of soil conditions, but it is relatively easy to carry out. Some recent soil surveys also have included indices of productivity for soils farmed with average managementand excellent management, indicating the yield of corn or other crops one could get under the two ma.nagement situations. This probably comes closer to what most people mean by prime lands than susceptibility to erosion as reflected in soil capability classes. Most recently, the Soil Conservation Service has begun a pilot mapping program to identify prime soils on the basis of moisture, length of grow- ing season, drainage, acidity or alkalinity, permeability, stoni- ness, and erodibility. In addition, they are including in their work important farmlands and nonprime soils of statewide or local importance (Dideriksen and Samps on). This more sophis- ticated approach to identify prime and other important soils will be, in theory, more useful than most other methods of iden- tification of the best soils. b..Use value The entire realm of concepts associated with development -273- rights and use value as opposed to market value of land is an example of complexity arising from an abstract idea. This type of complexity is particularly critical for the purchase of devel- opment rights and transferable development rights, which involve the explicit separation of development rights from other rights and the gale of purchase of this somewhat artificial commodity. It presents less of a problem for purchase and subsequent resale or lease with restrictions because the rights are separated through the normal transactions of selling land restricted by easement. The widespread use of differential assessment in which use value is usually established administratively through use of an approved formulas has provided the educational benefit of the concept of use value and therefore, by extension, of development value. Use value refers to the value of the land if it were to be used in the forseeable future for a given use, such as'agricul- ture, forestry, or grazing. Particularly, it excludes any incre- ment to value which might arise in anticipation of possible future urban development. The market exchange value of land in a rural use such as agriculture is equivalent to agricultural use value only if influences of urban pressure are lacking. In all other situations use value is not set by the land market. -274- The divergence between-current usevalue of land and its market exchange value near urban areas forms a central feature of three types of land use controls. First, where rural land is differentially assessed it is necessary to be able to estim- ate current use value as well as market exchange value so that the land may be taxed only on its current use and not on some possible future use and so that any deferred taxes may be estimated accurately if the land is taken out of an elig- ible use. Second,, where the development rights on rural land are to be purchased, it is necessary to be able to estimate the cost of those development rights which, by definition, are valued at the difference between market exchange value and current use value. And third, where land is zoned for rural uses it may be desirable to estimate the loss of value of land that is restrict- ed in its development potential. How much of an economic opp- ortunity cost is placed upon private land owners whose land is restricted to rural uses? Even though the concepts of use value and the value of development rights are fairly straightforward, the.actual app- lication of the idea to specific situations is quite difficult. Direct measurement of use value on land near the rural-urban fringe is impossible since the exchange values of land that -275- one can observe include speculative components that reflect an- ticipated future development. There is no market experience at all to examine in order to determine the value of development rights, which are never sold by themselves. Thus, it is necessary to rely on indirect means of estimating the use value of land and the value of development rights where urban pressures have begun to be felt. Basically, there are two methods for estimating use values: a comparable sales approach and a class of capitalization of income approaches. In the following paragraphs, we shall describe, rather generally, how these methods have been used in several different states in connection with their differential assessment laws assuming agriculture is the current use. There is little experience with assessing the use value of land in other types of rural uses except for timber lands or other resource-producing sites which are only infrequently intruded upon by urbanization. Where it is impossible to observe the use value of land in areas under urban pressures comparable sales may be used to es- tablish a use value for agricultural land by observing the price farmers are willing to pay for similar land in areas which are not experiencing urban pressures. This approach is utilized A detailed analysis of the use value of New Jersey agricultu ral land by RSRI is contained in the Appendix. -276- in New York State, for example, to establish guidelines.for use value assessment of agricultural land (Locken,'pp. 56-59). There are three serious problems with this method of es- timating use values though. First, how is it possible to find exactly comparable'agricultural land in areas which are not under urban pressures? For example, what land,in the rest of New York is exactly comparable to the productive po tato land which is found in Suffolk County (Long Island) -- all'of which is'under development and speculative pressures? Second, in'many states it may be very difficult to find areas which are not subject to some degree of urban pressures; this is especially true in the Northeast. Third, the value of some land for farming is en- hanced by proximity to 'urban markets -- how@c'ah this be estimated' when comparable sales are far from urban areas? p As an alternative to the comparable sales approach it may be possible to estimate agricultural use values through the capitalization of the residual income accruing to land. In particular, the residual income (R) is defined as R = Y - VC - FC - RM where Y is the gross*income derived from farming, VC is the variable costs of farm operations (such as seed, fertilizer, the operation of machinery, and labor), FC is -the depreciation -277- of fixed farm investment in buildings and equipment, and RM is the return to farm management. It can be seen that the meas- urement of residual income requires a large amount of detailed information on the cash flows of farm operations. In addition, residual income will vary according to the type of farming, the productivity of the soil, and the efficiency of farm manage- ment. Finally, even if very detailed information on the cash flows of various farming operations were available, two costs in particular are very difficult to measure: the value of the farmerls own labor and the return to management. Usually the farmerts own labor is valued at the cost of obtaining outside. help and the return to management is usually calculated As some fixed percent of.the gross income from farming that can be ex- pected from an "average" level of management. Because of these difficulties the residual income.accruing to land often cannot be estimated directly. Thus,, some 'states attempt to approximate this value by looking at the cash rents paid by farmers for agricultural land. For example, in Cal- ifornia, assessors must first look at cash rents in order to deter- mine the agricultural use value of land (see Keene, et al., pp. 274-279). However, cash rents may not actually reflect the true agricultural productivity of the land, since some landlords -278- rent land just to cover taxes and other fixed costs or just Ito get the land under use value assessment. This is especially true in urbanizing areas. Therefore, despite the large data requirements, a number of states have decided upon estimating the residual income by looking directly at the cash flows of farming operations. To this end., a simplified approach or broad guidelines are typ- ically established in order for local assessors to estimate use values. For example, in New Jersey the net farm income for the State, as estimated by the Crop Reporting Service, is allo- cated to the various counties using gross farm income data from the U.S. Census of Agriculture. (See Locken, pp. 41-49). In Maryland, the residual income accruing to'land is estimated according to the productivity of the land for growing corn (see Keene, et al., pp. 133-136). Because residual income tends to vary greatly from year to year.many states average the res- idual income for the last several years rather than rely on a single years's figure. Once the residual income has been estimated it must be cap- italized at'the proper rate in order to establish the agricul- tural use@ of the land'. In particular, UV R/CR (2) -279- where UV is the agricultural use value, R is the residual in- come accruing to land, and CR is the capitalization rate. The capitalization rate is made up of several elements CR = i + t + r where i is the rate of interest.or the cost of obtaining cap- ital for farming operations, t is the effective real property tax rate,, and r is the rate of risk associated with farming. Of these elements, r is the most difficult to estimate. For purposes of use value assessment most.states use capitalization rates of around ten percent. The formula for use value presented above is static; i.e. it neglects inflation. If the residual income is expected to, grow at g percent per year (the rate of inflation), the use value of land is UV R/(l + CR) + R(l + g)/(l + CR)2 + R.(l + g)2/(1 + CR)3+ R(l + g) 00 /(1 + C.R) 00 (3) which reduces to UV R/(CR g) Thus, if.we wish to account for inflationary growth in the re- sidual income the capitalization rate that should be applied is 1 Using the equation we assume the residual income will continue in perpetuity. -280- (CR 9) (see Gaffney). Since inflation for the last ten or so years has averaged around six per cent per year, this suggests that the capitalization rate that should be applied to residual incomes is around four percent (ten per cent minus six per cent One more factor should be considered before leaving the subject of use value. In many areas farmers are paying prices for land (for purely agricultural purposes) far above what many would consider "reasonable" agricultural use values. For example, in Illinois during 1976 farmers were paying an average of $1345 per acre for agricultural land (Farm Real Estate Market Devel- opments). The reason farmers are willing to pay so much for land is because they are expanding their holdings rather than starting anew. if a farmer has a large fixed investment in buildings and equipment he may consider only the additional costs of bringing more land into production when bidding for land. In addition, the risk and the cost of acquiring funds may be much lower for a farmer who is expanding his holdings rather than one who is just starting, which would in turn lead to a lower capitalization rate. Thus, we can show that because of a higher residual income and a lower capitalization rate, farmers who are expanding their holdings are willing to pay more,for land thaln the "average". agricultural use value. This factor should be considered when estimating agricultural use values. -281- 2. Establishment of New Institutions The most obvious and most complicated example of new instit- utions required by a land use control is the (private) market in transferable development rights (TDRs). In order for the TDR idea to function with an on-going market in transferable development rights a' market for these rights must first be es- tablished and the nature of this market will in turn affect the compensation received by land owners whose land is restricted to little or no development. There is virtually no experience with such a market since none of the enacted TDR programs has experienced any more than one actual transfer of development rights. Thus the implementation of a program that is going to provide compensation to restricted land owners will require care- ful forethought. In order to implement a TDR program, the planner must de- termine the size of the growth and no growth zones, and the number of development rights must be awarded in such a way that the subsequent.market in TDRs will be reasonably certain to result in adequate compensation to restricted land owners. In order -282- to make these decisions responsibly, it is necessary that at- tention be paid to the interrelationship between the supply of 1 and demand for rights. .In a static situation, the supply of transferable development rights is simply the number created by law and allocated to land owners in the no-growth zone. The supply is then not at all responsive to the price of transferable development rights since there is no way to produce more (other than by printing more certificates which is a public function, not a private market decision). See curve "S!' in Figure 6-1. However, when the supply side is analyzed in a dynamic framework (Field and Conrad), it can be seen that different TDR holders will have different reservation prices at which they will release their transferable development rights for sale in the TDR market. These diff- erences might occur becaus e some people are better bargainers than others,, because some people want money right away and will take a lower price, because some people are speculating in TDRs in the belief that the demand for them is increasing and so on. This yields a 11supply" curve that is sensitive to prices of, TDRs. shown as the offer curve "Y' in Figure 6-1. The demand for transferable development rights by developers building houses, industrial, or commercial buildings in the growth IWe wish to emphasize that this discussion is about the establish- ment of.a working market in TDRs, not about the establishment of a TDR bank type of program or a program characterized largely by government intervention in the TDR market. Price of TDR's rt Ct 0 @-h Cn OL Price of TDR's 0 rt H. rt 0 P-h a3 -284- zone-is the other side of the TDR market. A developer would want to buy such rights if the higher building densities they permit would yield him higher surplus. Under competitive conditions, he would be willing to bid for transferable development rights until the amount bid equals the increment in his surplus from the development (i.e., until the bid equals marginal surplus). This is depicted as the bid price curves in Figure 6-1, whose downward slopes imply that each additional TDR provides less and less sur- plus to the builders. The surplus from building residential floorspace depends upon the demand for floorspace, which in turn depends on the in- crease in number of households, the loss rate of existing stocks of housing, the number of families having children, the avail- ability of mortgage money, income levels, etc. The demand for commercial and industrial floorspace is dependent upon general Surplus is defined as the difference between a) the revenues from the sale of floorspace and b) the material, labor, and managerial costs of producing that floorspace. The cost com- ponent, b, does not include land costs (for reasons to be ex- plained later) or the costs of transferable development rights. it does include normal profits to the developer, though. -285- regional growth, taxes, and many other considerations. However, especially in the case of residential demand, the character of the floorspace may be changed by the TDR program in that some de- velopment may now be occuring at higher densitites than before. 'For example, single family residences on large lots might be replaced with row houses or garden apartments. And consequently those people desiring single family houses on large lots may drop out of the housing market in the growth zone.@ But, in Addition., those households demanding higher density units (perhaps at a lower cost per unit) will be attracted into this housing market. At any rate the demand for floorspace, and hence the biddingfor transferable development rights is difficult to predict without a detailed market analysis. Indeed, such an analysis should also include study of the production aspects of floor- space in order to determine substitution patterns of land, TDRs,-, materials, and labor and to determine economies of scale obtained at higher densities of development. .The market price of transferable development rights is the result of the supply and demand interrelationships. All devel- opment rights which are interchangeable (i.e. perfect substitutes) will receive the same bid price at any point in time in a com- petitive situation. This i s indicated by the intersection of -286- the supply and demand curves as illustrated in Figure 6-1. In a market situation under an ongoing TDR program the sur- plus generated by building floorspace must be used to bid not only for transferable development rights but also forland. Hence, generally speaking, the price of land in the growth zone will not 2 necessarily remain the same after the TDR program is implemented. It is likely to.go up as measured in dollars per acre, because sur- plus per acre of developed land may increase if the higher density allows total surplus to increase., (It may also be true that land, prices in the growth zone per dwelling unit will go down as land is used more intensively in the growth zone.) A more detailed discus- sion can be found in the article by Berry and Steiker, but the im- portant-point to remember is that land prices and TDR prices are-, determined simultaneously in the marketplace -- the planner cannot assume that land prices will remain unchanged. The supply and demand curves. emerging in the market for,trans- ferable development rights will depend on the amount of land in the growth and no-growth zones. One must be careful to guard against issuing too many development rights which will depres,s,their prices. 1In economists' terms these prices of TDRs are rents, bid out of surplus. They are not like the costs of materials since TDRs are not manufactured or produced as such. 2 Land prices, like TDR prices, are economic rents. -287- In addition, to the extent that too little developable land is in- cludedin the growth zone, bids for land will tend to be relatively high and bids for transferable development rights will tend to be relatively low (but not necessarily in all cases as is pointed out by Berry and Steiker). As a consequence, the growth and no-growth zones must be de- limited not only with an eye toward environmental considerations but also with an eye toward the marketability of transferable de- velopment rights. Much of the discussion by Nieswand, et al. of the South Brunswick Demonstration Project is devoted to this prob- lem. As a first approximation to designing growth-and no-growth zones so as to generate a strong demand for development rights, the South Brunswick growth zone was bounded so that it could accomodate 12% more TDRs than are to be created. As can be seen from the preceding discussion, there is very real possibility that the compensations derived by some land- owners in the no-growth zone from the sale of their transferable development rights will be only a small fraction of what the market exchange value of the development rights associated with their land would have been prior to the TDR program. The supply of TDRs may be too great with respect to the demand schedule for the. TDRs, with -288-. the intersection of the supply and demand curves yielding a low price for the TDRs. The value of TDRs may also be especially un- certain when the program is first started and before the nature of the surplus function and its 'constituent components is well understood. To circumvent these kinds of problems, government interven- tion in the TDR market may be necessary. The most commonly men- tioned type of intervention is that of a development rights bank which would hold transferable development rights and pay the land- owners in the no-growth zone the difference between the value of their land before and after the TDR program on the basis of apprais- als. The development rights bank would then sell the transferable development rights to developers in the growth zone, manipulating the supply of the TDRs so as to obtain favorableprices, thereby recouping some or all of the costs of purchasing the development rights at full market value from the landowners in the no-growth zone. It is not clear that in order for the TDRs.to be legally valid that compensation must be 100% of the difference between the value of the land before and after the TDR program, only that the compensation is to be "fair." -289- .It may be desirable for the government to appoint a non- governmental agency to sell the transferable development rights since such an agent would probably be a better speculator and bargainer than the municipality in real estate markets. (The government would still pay land owners in the no-growth zone the value of their development rights prior to the TDR program.) Agents competing for the right to sell transferable development rights would-then make bids to the municipality for the right to sell the TDRs. In this way the municipality would recoup .some of the costs of acquiring the development rights on land designated for open space uses. It is fairly apparent, even from this incomplete and non- technical discussion of the market mechanisms that must be established, that planning for a workable.TDR program is a com- plicated business. It is not unlikely that such planning lies beyond the capabilities of most agencies. ,As far as we have been able to determine.none of the municip- alities passing TDR legislation has carried out anything but a seat-of-the-pants estimate of the demand for TDRs (although Nieswand,.Chavooshian, and their colleagues have prepared a detailed demonstration program for a township that has not adopted TDR legislation). It, therefore, appears that there is -290- little assurance that any of the existing programs will actually succeed at retaining desired patterns of open space or farmland. C. Magnitude and Distribution of Costs Costs of a land use program may be public in that society in general pays for part or all of the program,or they may be private in that a particular segment of society bears some of the costs. Public costs may be direct, such as administrative costs and the costs of acquiring land or development rights from private land owners, or they may be indirect,, such as those experienced when the tax burden is shifted from owners of differentially assessed land to all other land owners. Indeed, this latter has some aspects of private costs in that the shift in taxes may fall onto a rather small group of taxpayers. Private costs associated with land use controls are typically the diminution in land values brought about by restrictions on land use such as those of exclusive farm zoning. Here one group of people bears the economic costs of a land use program while society in general enjoys the benefits. Finally, the capital gains tax also involves private costs which directly penalize certain classes of owners who sell their land. Direct public costs are u sually a primary concern in the in the consideration of any land use legislation. Indirect -291- costs, or tax expenditures, are more difficult to identify and monitor and so usually receive less scrutiny than direct public outlays. They are typical characteristics of most direct controls. Perhaps one reason why indirect controls are favored by so many legislative bodies is that they appear to help the farmer "without costing anyone anything." Table 6-2 summarizes the experiences or expected exper- iences of each land use control with respect to administrative, other. public, and private costs. In general, we have beenable to gather little information on the dollar costs of administer-, ing a program. As for acquisition costs, the magnitudes of public and private costs involved in development rights acquisi- tion orland use restrictions respectively are of considerable importance to both the enactment or lack.of enactment of a par- ticular program and to the impl ementation of the program on a large scale. To study this, we have made estimates of the dollar value of development rights on farmland for five counties in New Jersey. If development rights are purchasedby a public agency then these will be public costs (as they are under the New Jersey Farmland Preservation Program Demonstration Project This is simply the difference between the market value of the land and its farm use value. -292- in Burlington County), but if development rights are in effect "cancelled" by zoning land for little or no further development then they will be private costs borne by the restricted land owners. Figure 6-2 summarizes our estimates of the value of the development rights on farmland in five New Jersey Counties. Full details of the calculations may be found in the Appendix. The figure illustrates a number of points about the market ex- change value of these development rights. 1) Generally speaking, development rights are worth more per acre on smaller parcels than on larger ones. 2) The average value of development rights ranges from around two thousand dollars per acre in the more urban counties such as Burlington to practically nothing in very rural parts of the state such as i n Cumberland and Salem Counties. (See Figure 3-2for a map locating these counties in the State.) 3) Since farm use value depends upon net farm income the portion of total exchange value which is ascribed to devel- opment rights also depends on net farm income. Thus, should net farm income remain the same in current dollars while in- flation continued to erode the value of thedollar we would ex- pect that, everything else remaining the same, @he value of -293- Figure 6-2 ESTIMATED DEVELOPMENT VALUE OF FARMLAND IN FIVE NEW JERSEY COUNTIES Burfington Cumberland & Salem Hunterdon 2- 2- 2- 01 9 QL > In Warren LEGEND 2- c'o 2- 5Q E 1; E 10 0 E E ON T E Parcels 10-50 acres Parcels over So acres A C NOTES: A. Assumes constant net farm.income in current dollars and inflation rate of 6%. B. Assumes net farm income increases at same rate as inflation. C. Assumes 2% increase in net farm income over and above 6%.general inflation. SOURCE: estimated,'by authors, see Appendix. -294- development rights on farmland would be higher than if net farm income (in current dollars) increased at the same rate as in- flation or increased at a higher rate than inflation. 4) Extrapolating from the value of development rights on a single parcel in an.urbanizing county such as Burlington to several thousand acres of farmland in such a county we can immediately see the great magnitude of the.costs involved in either purchasing those development rights or in zoning that land for exclusive farm use. In 1974 in Burlington County there were 148,000 acres of land in farms. If a modest land use control program were to put 20,000 acres of farmland into an ex- clusive farm use zone or to purchase the development rights on that land then the costs would be on the order of $30,000,000. Although thisis not a large amount it still may be politically difficult to pass a bond issue for purchases of development rights when the costs of many other government services are rising so rapidly..,.I.n fact, the $30,000,000 figure is probably low for a program which concentrated on the most rapidly growing parts of the county. Furthermore, of course, a larger program in- cluding more acreagewould cost more,and it seems reasonable to The N.J. Farmland Preservation Demonstration Program will prob- ably employ lower use values than we have estimated, thereby in- creasing the costs of acquiring farmland by as much as $800 an acre. The State's estimates will probably be basedlon the use values determined for their differential assessment program, about $200 per acre. -295- assume that in a large metropolitan area a larger program would be necessary. A 20,000 acre program would protect farmland in only about two townships. Although we do not y et have the detailed bids made in Burlington County, the development rights appear there to be less expensive than Suffolk County!s on Long Island, which averaged about $6,500 per acre in the bids offered by land owners to the County. Appraisals, which will actually determine the amounts to be paid, have not yet been made for the land offered for participation in either program. However, discussions with members,of the New Jersey Department of Agriculture indicate that the estimates in Figure 6-2 might be low: hence, the costs of a program could exceed what we have estimated above. In fact, the first 100 offers by landowners averaged about $2,900 per acre thus doubling our cost estimate. (These are not the final agreed upon prices, however). Our estimates then, can be used only as a first approximation in need of further refine- ment as development rights are actually purchased from farmland owners. In conclusion, the costs of a direct land use control in an urbanizing area can be quite large whether the program puts the costs on the public at large or puts them on owners of land -2q6- restricted from further development. This is a major limiting factor on the application of direct controls and was one impetus to the invention of transferable development rights, a direct control that has the potential for ultimately putting the costs for open space preservation and farmland retention on the people who buy or rent new homes in the "growth zone." Of course, even TDRs, if they adequately compensate land owners in the no- growth zone, still have a large cost associated with them the costs do not simply disappear but are rather redistributed. The costs of indirect approaches are largely administrative and, for those which reduce some landowners' taxes, they may appear as significant tax shifts, a shifting of.taxes away from participants in the program to the remainder of the prop- erty owners in the taxing jurisdiction. (Note that th is shift can fall upon participants who have some property not in the program.such as their residences,as well as upon individuals who'have no property enrolled in the program at all.) It is not so much the dollar amount of this shift that is important but its effect per non-participating taxpayer. Thus, it is useful to express the tax shift as a proportion: dollars of taxes shifted per dollar of assessed value of the property of non- participants in the program. This proportional shift then is -297- reflected in the difference between the tax rate before and after the implementation of the differential assessment necessary to keep tax revenues the same in the taxing jurisdiction. Looking at the proportional tax shift another way we see that its magnitude is dependent upon: 1) The ratio of the fair market assessed value of property enrolled in the differential assessment program to the fair mar- ket assessed value of all other property in the taxing juris- diction. The larger this ratio the greater the tax shift. 2) The difference between the fair market assessed value of property enrolled in the differential assessment program and the assessed development value of property enrolled in the program (i.e. the use value of the enrolled property). The small- er the use value the greater the tax shift. 3) The tax rates before and after implementation of the differential assessment program necessary to make the tax reve- nues equal before and after the program is implemented. The greater the tax rate after the implementation of the program, the greater the tax shift. It is difficult to say in general how large the tax shift will be in any taxing jurisdiction or for all taxing jurisdictions 1The mathematics of the tax shift is as follows*. -298- (footnote continued) Let: T be the tax rate prior to differential assessment, A T be the tax rate after differential assessment, V be the fair market assessed value of property enrolled in the differential assessment program, V2 be the fair market assessed value of all other property, Di be the assessed development value of property- enrolled in the program, and let Rev be the taxing jurisdiction's desired revenues. Assuming Rev is the same beforeand after the differential assess- ment program, Rev TV + TV D 2 T(VI I IV 2$ where T T. (2) A The tax shift is TV TV 2 2* Rearranging the terms of (1) we find that A A TV - TV TV - [T(V D tax shift in dollar (3) 2 2 1 1 1 value. As a proportion of the assessed value on non-participating property, we divide both sides by V 2: A T T T- V T (V - D proportional tax ,shift V2 V2 -29q- taken together in a county or state. The problem is complicated by overlapping tax jurisdictions such as school tax districts and municipalities, by annual charges in tax revenue needs, and by revenue sharing and other intrastate and interstate expend- iture flows (Hady and Sibold). The empirical evidence that is available on tax shifts is spotty. From the work reviewed by Hady and Sibold and the dis- cussion in the report by Keene,et al. it seems that most taxing jurisdictions experience only minor tax shifts. However, there are occasional situations where the increase in taxes on nonparticipants can be over $100 per capita per year. -300- D. Uncertainty Undoubtedly, many legislators and planners are reluctant' to sponsor, enact or attempt to implement a land use program which is filled with uncertainties as to@how it is actually' going to work out. These uncertainties are of two general kinds: those which result from unfamiliarity or lack of experience with a control, and those,which result from-the in- nate unpredictability of what will happen when certain types of controls are implemented. 1. Familiarity The need for familiarity has made the evolution'of'land use controls a rather slow process, advancing by increments rather than by sudden leaps. Proposed and enacted programs are most likely to be modifications of existing programs or adoptions of programs successfully implemented elsewhere. Incrementalism can be seen to work in adopting the long- familiar idea of zoning to rural areas for preservation of rural landscapes or in extending "tax expenditures" (i.e., tax breaks) to farmers and other rural land owners through the differential assessment of real property. A slight leap from prededent is required to enact and im- plement large scale programs of public purchase of1development rights. Although the use of easements is an old and time-honored method of public (and private) extension of specified rights -301- onto (another's),private pr operty the concept may seem foreign ,to many landowners. In the nineteen-sixties when the Upper East Branch of the Brandywine demonstration project was under- way, the concept of severing development rights from other rights in the land was unknown to most lay people (Strong, 1975). Unfamiliarity with the concept and the fears people harbor of the unknown constituted one of the major reasons that the demonstration project was unable to go forward with its plans for the purchase of conse rvation or open space easements on about one half of the watershed. By the mid-nineteen-seventies, in contrast, the separation of development rights from land seems less radical,as demonstrated by the willingness of land owners to participate in the Suffolk County Farmland Preservation Program. A slightly bigger leap from precedent is required to enact or.implement a program of preemption of rural land sales by the public, although again this idea is often used in private market transactions. Coupling it with resale strikes a more familiar and therefore acceptable chord than coupling it with leaseback. The public ownership of land with leases to private famrers is perhaps one of the more unfamiliar approaches, since the private ownership of land is a prominent aspect of American -302- history and culture. The rapid disposal of the public domain in part reflected the importance of putting the land in the hands of the individual and now the return of land ownership to the state may prove to be a difficult change of course. Nonetheless, it must be remembered that one third of the nation's land is still in the public domain, much of it leased to private individ- uals or firms for grazing, timber cutting, or mineral extraction. Hence public ownership with private leasing is not totally for- eign, although it is more foreign to Easterners than to West- erners. 2. Permanence of the Control and Certainty of Outcome Unfamiliarity is but one aspect of uncertainty. A land use control may be quite familiar and widely used but still subject to great uncertainty as to how effective it really is. Zoning is a prominent example of this. The permanence of zoning is often open to question as variances and more severe altera- tions are frequently made, especially when land values could appreciate rapidly with a zoning change. As noted in Chapter V, many planners felt that rural zoning would not be likely to with- stand the pressures of land speculation in areas of heavy urban pressure: it is too profitable to change the zoning. Hence zoning may prove to be too uncertain with regard to permanence -303- to be a widely applied method of land use control that can effect- ively preserve open space and retain farmland. The decisions of a development permit board like a zoning board may vary substantially from time to.time, depending on the current composition of the board and the shifting pressures in support of development and environmental protection. In 'contrast, when rights in land are acquired by the public, there is m.u ch greater certainty that land use will be controlled permanently. Uncertainty as to the extent and nature of participation ina land use program may also arise. If the program is Vol- untary as opposed to mandatory one cannot be sure how many land owners will enroll in the program or how much land that should be *Protected actually will be included in the program. A very spotty pattern of participation is more likely to undermine the effectiveness of a program than a pattern of participation that includes most of the land that is desired to be protected. In particular, the pattern of enrollment in a voluntary program may be influenced by a number of program characteristics. 1) The type of application procedure necessary by eligible landoOners may affect participation, Programs having eas- ier application procedures will probably be less uncertain in their enrollment pattern than those having difficult or time -304- consuming requirements for participation. 2) A requirement that applicants apply collectively instead of individually (as for ex- ample the New York Agricultural Districting Program), may have mixed effects. Such a procedure may ensure that larger and more con- tiguous holdings, of land be included in the program but may also reduce the probability that many individuals will go to the effort of trying to get together with their neighbors to enroll. And 3) t1j.pre could be a great deal.of uncertainty inherent in the effec- tiveness of the program if participation is not sufficiently limited. Restrictive requirements attempt to include only the most desirable land in the program and to exclude most of the people who might participate but whose land is not particularly valuable- in,-terms of the program's goals. Programs with fairly vague or-general goals may thus be more likely.t.o have less restrictive limitations on who can -participate, but,one cannot be certain that the land in- cluded in the program will form any coherent pattern of agriculture or. open space. Probably the greatest degree of uncertainty inherent in any land use control is that generated by transfer of development rights. The effects of a TDR program result from complex and difficult-to- predict market interactions, as was described in the previous sec- tion. There is no experience with TDR transactions anywhere and so the degree of compensation that will be received by landowners -305- whose land is restricted from further development is currently an unknown. And since it is so difficult to establish a private market in TDRs that will yield ad equate compensation with a high probability, transferable development rights programs may be very slow in materializing. To date no community has been bold enough to establish a mandatory TDR program which would establish the feasibility of TDRs. The question of uncertainty pervades the only major legal decision to date on TDRs, that of Fred F. French Investing Co. vs. City of New York. This case involved the creation of a- "Special Park District" in Tudor City in Manhattan. Tudor City is a privately owned set of buildings and small parks. A new owner, Fred F..French Investment Company, wanted to develop more intensively by erecting buildings in the park areas. The city, wishing to preserve the parks, gave French transferable development rights as compensation for not being able to put up the buildings. However, the location of the transferred development rights was not specified,and City approval of the transfer was required. French sued,and ultimately the TDR plan was rejected by the courts (350 NE 2nd 381). In this case, Judge Breitel, Chief Justice of the New York Court of Appeals looked at the nature of the regulations -306- in the "no-growth zone" of the Tudor City TDR scheme, treating TDRs as lying within the police power, the power to regulate. Justice Breitel examined three aspects of the reasonable- ness of the police power as applied in this instance. H e found that the restriction of the land involved to use as a park served a legitimate governmental purposei that is was not arbitrary in that the means to the ends (protecting a park) were reason- able,, but that the owner of the land in the park was "frus- trated" in his use of the property. That is, the property owner found his land rendered "unsuitable for any reasonable income productive or other private use-for which it is adapted and thus its economic value or all but a bare residue of its value. (was destroyed)" (p. 387). Hence the Court rejected the TDR plan. The reason for the diminution of value is that the trans- ferable development rights awarded the property owner as compen- sation are of too uncertain an exchange value. Realization of their value would require finding land and a buyer to transfer them to and getting approval by the City of this'transfer. That is5 the severance of the development rights from the prop- erty "has rendered their value so uncertain and contingent as to deprive the property owner of their practical usefulness,- -307- except under rare and perhaps coincidental circumstances." (p. 389) In his comments on the Fred French decision, John Costonis (1976) pointed out that a TDR program based upon voluntary par- ticipation would probably be acceptable in the judicial process. Mandatory participation as in the Fred French case may force land owners in the no-growth zone to suffer great diminution of the value of their property, but voluntary participation in a TDR program by a willing land owner cannot allow one to fall back on the argument of being forced to forego income from property. Of course, voluntary programs may result in a very limited or scattered pattern of protected land; currently all rural-urban fringe TDR programs are voluntary and there has been almost no participation at all. 1 Justice Breitel went on to point out that new land use control measures such as TDRs are needed by society and that making the compensation to the land owner in money averts the question of unreasonable use of the police power which would frustrate the land owner in his attempt to use his property gainfully. A development rights bank program for TDRs is explicitly suggested by Justice Breitel as an example of a type of TDR program which may be legally acceptable. However, he did not use the Fred French case as an opportunity to look at TDRs as a new legal entity. As Costonis, Rose, and others have taken pains to point out' the transferable development rights idea is not purely a prob- lem of eminent domain or an example of the police power, but instead it is "sui generus: it is in a class by itself" (Rose 1975, p. 922). Attempts to analyze a TDR plan in either the police power or eminent domain framework may inordinately argue against TDRs because the regulatory aspects might be ignored at the ex- pense of the compensatory or vice versa. This particular diff- iculty does not seem to have pervaded the Fred French case, though. -308- E.' Conclusions In this chapter, we have identified several characteristics of land use controls -- notably complexity, cost, and certainty and have examined them in relation to enactment and implemen- tation. on the basis of this discussion of characteristics, it is tempting to go on and rate the various land use controls on how likely they are to be enacted and implemented. Certainly we are safe in concluding that the indirect con- trols which provide tax or other benefits to landowners are by far the most acceptable. These controls make some landowners better off without obviously and explicitly making others worse off. Already differential assessment for property and diff- erential assessment for federal estate taxation are almost univer- sal within the United States. Legislatures are now becoming .interested in differential assessment for state inheritance taxation. The elements of agricultural districting, which also provide certain benefits,for participating farmers unac- companied by demonstrable costs to others, also seem likely to become widely enacted and implemented. It is much more difficult to rank the remaining controls, although the group least likely to achieve.implementation prob.- ably includes TDR because of its complexity and uncertainty and the capital gains tax because of the high costs it imposes on -309- one group, a group which has traditionally had close alliances with government. Inverse condemnation also should probably be included in this group since it appears to have few advantages in addition to those of exclusive rural use zoning and is an unfamiliar hybrid which explicitly opens the door to suits for damages by affected land owners. The remaining middle group contains land use controls whose characteristics lead to mixed prognostications at best. Exclusive rural use zoning and development permit systems in- volve administrative procedures which are familiar to legis- lators and bureaucrats, and their public costs are low. Their private costs, in contrast, can be quite high, and some uncer- tainty lingers about the constitutionality of exceedingly stringent regulatory measures. Methods which are concerned with the purchase of development rights are less beset with uncertainty, but require substantial public outlays. A more precise classification would rest on insufficient evidence. In addition, any classification based solely on characteristics of land use controls should be tempered by con- sideration of local development pressure, quality of land for agriculture or other permitted use, regional political trad- itions,- and the distribution of power within the jurisdiction. -310- Also of critical importance in the adoption-of a new type of control is the existence of a strong leader (such as Gov. McCall of Oregon or Secretary of Agriculture Alampi of New Jersey) who is convinced of the value of a particular type of land use control and who is willing to make a long term commitment to see that it is established. Chapter VII POTENTIAL EFFECTIVENESS OF LAND USE CONTROLS A. Considerations Related to Effectiveness Even if a land use control has been successfully enacted and implemented'. it will be of little use if it proves to be in- effective. Thus, the overriding question becomes how effective will a particular land use control be in achieving the goals of preserving agricultural or environmentally valuable land? The effectiveness of a program depends on three factors: (1) The extent to which the control prevents unwanted changes in land use, (2) The coverage ofthe control -- that is, the extent to which the program can be extended to cover all land designated for preservation,, and (3) The permanence of the control -- that is, the extent to which restrictions imposed on particular prop- erties be weakened.-removed, or otherwise violated over time. These three considerations constitute the basis of Table 7-12 which summarizes major findings concerning each of the as- pects of effectiveness for each of the land use controls under study. 1. Extent to Which the Control Prevents Unwanted Land Use Changes The focus of the land use program and the nature of the effects of urbanization together will determine the potential effectiveness of the control in preventing unwanted changes in -3li- Table 7-1 CHARACTERISTICS OF CONTROLS RELATING TO EFFECTIVENESS (A) (B) (C) (D) PURCHASE OF DEVELDP- PURCHASE & SUBSEQUENT PURCHASE & SUBSEqUEWr EXERCISE OF RIGHT OF (E) (F) MENT RIGHTS SALE LEASE PREEMPT12H INVERSE CONDEMNATION EFU ZONING Effectiveness Prevents un- Direct; restrictions Direct; same as (A). Direct; same as (A). Direct; same as (A).- Direct. Restrictions Direct. wanted change can be tailored to similar to zoning. in use: Di- each parcel. Term, rect-Indirect including in per- petuity, may bespe- cified. Coverage Application limited Same as (A). Same as (A). Canprotect more May be difficult by budget; espe- land than (A), (B), to apply to env. cially in areas of or (C) because can valuable lands high dev. value. select on basis of if they do not owner's intention have some eco- as well as nature notoically bene- of land. ficial use. Permanence: Difficult to change Same as (A). Same as (A). Same as (A). Subject to pres- Suscept- restrictions once sures for change ability of rights are,pur- as is all other legal@ in- chased. zoning. May not strument withstand in areas L,) to change of high develop- ment demand. Permanence: Original owner com- Similar to (A). Public holds fee; Similar to (B) or Similar to (F). Original owners Reduces pensated for loss leases based on (C); in addition not compensated; landowner's of dev. rights; rural use value. responds to market subsequent oi-mers ,economic subsequent buyers at earlier stage will pay only for need to de- will pay only for by only purchas- permitted use velop rural use value. ing properties up value if zoning for sale. is held rigidly; if not, specula- tion and resulting pressure to charge zoning may occur. Costs Relatively low in Same as (A), but a Same as (A), but Same as (B) or (C) Depends on extent to Public cost mini- areas of littie little 'more "front" much more "front" depending on dis- which landowners. mal; administra- urban demand; ap- money needed. money needed. position of prop- claim damages and tive cost only. proaches fee value Lessee pays rent, erty. level of awards made ,in areas of high but no explicit by court. Maximum demand. Few public' taxes. costs similar to (A). operating costs. Owner still pays taxes on usevalue. Equity Compensates fully Original owners com- Similar to (B). Same as (B) or-(C). Similar to (F); but No compensation for removal of pensated fully 4t landowner given for loss of right right to develop; markpt valtip, Rub- OpDortunity to claim to develop. cost shared widely. sequent purchasers compensation. bid only value for allowed'use. Dif- ference in cost shared widely. Table 7-1 continued (G) (H) DIFFERENTIAL VALUATION TRANSFER OF DEVELOP- DEVELOPMENT PERMIT DIFFERENTIAL FOR FEDERAL ESTATE & (K) MENT RIGM SYSTEM ASSESSMENT STATE INHERITANCE TAXES CAPITAL GAINS TAX AGRICULTURAL DISTRICTING Effectiveness Pr:vents un- Direct. Direct. Indirect. Mild Indirect. Mild sanc., Indirect. Reduces Indirect. Reduces ur- wa ted change sanctions on de- tions on development. profit from de- ban disruption to in use: Di- velopment. velopment. farming. No sanctions rect-Indirect on development. Coverage Zoning of "growth" Greatest potential Usually up to Nearly all eligible Long term owners Landowners in urban- and "no-gruwth" may be to shape owner; but un- will participate. exempt, and these izing area zones is public de- development within less sanctions i: tjnd.not may tend to own to form d tr ct cision, but use of small area; rather extreme, most land planned to be TDR is decision of than to keep ex- who are eligi- kept undeveloped. individual owners tensive areas un- ble will par- and developers. developed. ticipate. Permanence: Once dev. rights Like zoning; con- Tax saving in- A one-time avoidance Not applicable. Does not prevent do- Suscept- sold, may be dif- tinuing pressure creases as other of tax costs. Sanc- velopment. Economic ability of ficult to change for change likely properties in tions lessening de- advantages of contin- legal in- restrictions on to be brought on jurisdiction are terrent to develop- uing way be outweighed. strument property., permit board. built up, but ment as time passes. May be significant to change owners wishing social sanctions against to develop not development, however. likely to be de- terred by tax saving or sanc- W tions. Permanence: Owners in no growth No compensation to Reduce's current Lessens need of heirs Lessens incentive Provides a more certain Reduces* zone compensated offset loss of de- costs. to sell or develop. to develop. atmosphere for farming Landowner's when sell develop- velopment value. including preventing economic ment rights. Owners growth inducing faciii- need to de- who cannot sell de- ties. velop velopment rights may press for changes. Costs Administrative costs Administrative Tax expenditures; Tax expenditure. Produces additional Minor administrative only, but may be costs only. minor administra- revenue. Public ex- costs only. substantial. Usually additional tive costs. penditure low, ad- board must be ministrative costs staffed. only. Equity Compensates partly- No compensation Shifts tax burden Same as (1). Cost falls on land- No equity issues. to-fully for removal for loss of right to other tax- owner, developer. of right to develop; to develop. payers. costs borne by new- home.buyers. -314- land use. In areas subject to strong urban pressures (where con- trols are absent) conversion of substantial amounts of rural land to urban uses will occur as well as active land speculation. In these areas, the effects of urbanization are both direct (the conversion of land to urban uses) and indirect (the intense lo- calized idling of farmland). In such areas, direct controls have the potential to prevent unwanted land use changes. They spe- cifically forbid certain types of development on specified parcels of land. However, they are not a universal solution, since they are quite costly and may involve complexities and uncertainties which limit the possibility of their enactment or implementation. Indirect controls, in contrast, can not address the direct effects of urbanization nor can they adequately counterthe forces of ac- tive land speculation; their potential in preventing unwanted land use changes in areas subject to strong urban pressures is minimal. When combined with direct controls, however, indirect controls can alleviate some of the spillover effects and related indirect effects of urbanization in areas subject to strong urban pressures. Thus, indirect controls may be helpful in retaining farming ac- tivities in areas where the land base has been protected by direct controls. But if the indirect effects of urbanization remain un- mitigated, farmers and other rural landowners may be forced to idle their land or to move to other areas even though conversion of land to urban uses has been controlled. -315- Where urban pressures are less intense, indirect controls can be potentially useful. In these areas farmers are bothered by the indirect effects of urbanization and the result may be a slow switchover to those types of agricultural activities not re- quiring a long time horizon. The uncertainty about the long run future of farming in the sphere of weak urban influences may be lessened by the provisions of an agricultural districting approach to land control and by.differential assessment of farmland. We have not been able to observe such an improvement in the farmer's situation because comprehensive indirect controls, such as New York's Agricultural Districting Program, have not been in effect long enough, but at least the potential is there for preventing the relative decline of agricultural activities requiring long time horizons with large investments. In brief, in areas characterized by strong direct effects of urbanization, direct land use controls complemented by indirect controls would probably be most effective in retaining open land. In areas subject to less intensive urban pressures, the indirect effects of urbanization (if unaccompanied by significant direct effects) can potentially be countered by indirect controls. 2. Coverage of the Control In order for a landuse program to be effective, it is ne- cessary to include a large amount of desirable land (such as prime -316- farmland or aesthetically valuable landscapes) in the program. Difficulties in the coverage of the control may arise because of the uncertainties generated by low participation rates, problems in defining what land is desirable and what landowners should be eligible, and high costs that prohibit the application of the program to a large amount of land. Voluntary programs may result in a scattered pattern of par- ticipation that may or may not include land that is most desired to be protected. California's Land Conservation Act (the Williamson Act) and New York's Agricultural Districting Program suggest that voluntary participation in a program may result in little inclusion of land in the most rapidly urbanizing areas. In contrast, ini- tial indications from the offers received in the New Jersey Farm- land Preservation Demonstration Program suggest that where the farmer can keep his farm and get paid for the development rights (unlike the milder benefits from an indirect program such as Cali- fornia's or New York's) voluntary participation may incorporate the desired pattern of land in the protection program. Problems in defining desirable land may allow some landowners to include their land in the program and partake of its benefits even though their land may be of little value as far as the pro- gram's objectives are concerned. Conversely, aesthetically valu- able land or other land that is hard to identify on a map may end -317- up being excluded in part from the program's goals. Also, in defining eligibility requirements for a program it is often very difficult to establish criteria that will systematically exclude some land- owners and include others who will further the goals of the program. For example, Kolesar and Sholl reported that many land speculators participate in New Jersey's taxation program by renting their land .to farmers until they can obtain a buyer for their property with no intention of keeping the land in farms. The high public costs of some direct controls may severely lim it the application of a program, resulting in very little rural land being protected from development, Given the many demands'on government resources, it is difficult to see how the hundreds of millions of dollars necessary to buy the development rights on a substantial amount of farmland around Philadelphia or New York City could be raised. Thus, it seems likely that only small pock- ets of rural land can be protected through purchase of development rights programs in areas where land speculation has driven the price of land to a high level. High private costs of other types of direct controls (such as agricultural zoning) may also prevent their widespread applica- tion. It appears, however, that the landowners and courts in Oregon may be more willing to accept exclusive farm use zoning than landowners and the courts in the Northeast. Hence, we may not -318- expect to find that a control that works on one region of the country would be acceptable in another. 3. Permanence of the Control a. Effects of other public plans, policies, and programs. Many public plans, policies, and programs affect the use of the land and may either undermine or strengthen a land use control program. The construction of urban infrastructure, such as high- ways, reservoirs, water and sewer trunk lines, and power lines not only consumes substantial rural areas, but also acts as a sti- mulus to further urbanization. Through its Agricultural Districting Program, New York has taken a first step toward preventing government activity from interfering with agricultural production in its designated farming areas. The Program limits the local exercise of eminent domain to acquire farmland within agricultural districts. Oregon has gone one step further by embedding its exclusive agricultural zoning program in a comprehensive planning process and set of policies, which include the designation of urban growth boundaries, the designation of facilities whose planning and location is of statewide significance, and protections similar to that of the New York agricultural districts for all land that is included in exclusive agricultural use zones, -319- Such a comprehensive set of public plans and policies can greatly strengthen the effectiveness of any of the land use con- trols under study. Conversely, the construction of transportation and public facilities that is in conflict with the objectives of farmland and environmental preservation could put even the strongest controls under intense development pressure and lead to their failure. b. Effect of the control in reducing the landowner's economic need to develop. Landowners may be pushed into developing their land by the costs associated with holding it. They may also be pulled by the potential of making a speculative profit. In general, direct controls are designated to eliminate the possiblity of develop- ment and the pull of speculative profit that goes along with de- velopment. Some direct controls, especially those involving acquisition of development rights, remove some of-the costs associated with holding land in a quickly urbanizing area. To the extent that various cost pressures are reduced, the owner is less pushed to develop in order to solve his financial problems. Thus', programs in which the landowner is paid for his development rights can be expected to be somewhat less likely to be subject to pressure for change than programs such as exclusive agricultural zoning in which,those rights are removed without compensation. -320- Indirect controls based on tax expenditures, such as dif- ferential assessment programs, help reduce the cost pressures on landowners and thereby may reduce efforts to circumvent re- strictions,imposed by direct controls. c. Susceptibility of the legal instrument to change No matter how consistent are the comprehensive planning and other government policies, and regardless of how well the land use controls reduce the private costs that force development, in- dividual owners will still see opportunities to make larg'e;@amiounts of money by developing their land. Therefore, there will alwaYs be pressures to circumvent the restrictive provisions which govern the development of land or to change these provisLons. Although there has not been enough experience to make any conclusive statement, it is. believed that controls involving the purchase of development rights would be more difficult to change than those involving regulation. If the restrictions on develop- ment were changed, the public payment to the landowner for ac- quiring the development rights would have to be returned or else overlooked. In addition, the restrictions on the deed would have to be removed and such a change would require the approval of all parties involved. In contrast, regulatory decisions are common ly modified. Variances and changes of zone boundaries are most common for ordinary zoning, and one cannot exclude the possibility -321- that that tradition would be carried over to the exclusive ag- ricultural zoning. Although it may be inherently difficult to change development rights easements, their enforcement is not necessarily automatic. The National Park Service has reported violations of their scenic easements along the Blue-Ridge Parkway and"the Natchez Trace. Pri- marily, these have been by "second generation" owners, who purchased the land years after the easements had been purchased-;@ These vio- lations were often a result of ignorance or misunderstanding of the restrictions imposed in the deed. However, no major difficulties have been reported in enforcing the easements acquired by private conservation organizations where the landowners are supportive of .the goals of the.program. In general, easements forbidding the construction of new buildings are more easily enforced than those forbidding the cutting of trees (Coughlin, Plaut,and Strong). The management of any control program -- the acquisition of development rights or regulations -- requires clear communication about what kinds of development are allowable, a policing system which identifies incipient violations before they become irre- m.ediable, and support for the objectives of the program by local government. Without such conditions, of course, a regulatory pro- gram would also be most difficult to enforce. -322- B. Conclusions In summary, it appears that direct land use controls are potentially more effective than indirect controls in preserving open land in areas subject to strong urban pressures. Among the direct controls those involving the acquisition of development rights are less likely to be changed or weakened than those in- volving regulation. But because of their high public costs, par- ticularly in areas of rapid urban growth, it may not be possible to apply acquisition-of-development-rights methods nearly as widely as regulatory controls. The cost of programs involving the acquisition of development rights could be spread out over many years by exercising the power of preemption, acquiring only those properties in the designated area which come on the market and subsequently selling them with restrictions. The extent to which this would help is not known, but research involving simulation of the land.market could yield valuable insights. In areas subject to strong urban pressures, it may be diffi- cult to maintain rural use zoning because of the high costs it imposes on private landowners. There are signs, however, that the courts are coming to regard the change in the current use value (rather than in the market value) of the land as the proper measure of the diminution of land value resulting from regulatory -323- controls. If this is so, exclusive agricultural zoning would be based on a much firmer legal foundation. Some clues about the long-run effectiveness of exclusive farm use zoning will be pro- vided by how Oregon, California, and Hawaii fare as areas zoned for rural use come under development pressure. Over the short run, at least, we see the use of no single direct type of control clearly dominating the others. More likely the period of testing will continue and the costs and performance of various controls will be watched carefully by interested juris- dictions. Indirect controls may be effective by themselves in areas subject to weak or moderate urban pressures where little land is being converted to urban use but where farmers may change the pattern of agricultural activities in response to uncertainties generated by urban spillovers and engage in passive land specula- tion. The major effect of the indirect controls will be to strengthen the viability of farming or other rural activities rather than make them more profitable than urban development. In .areas of strong urban pressure, indirect controls can complement direct controls and alleviate financial bur dens and other nuisances traceable to urbanization. Any land use control program will be strengthened if it com- bines elements of direct and indirect controls. The most encouraging -324- programs we have examined have combined several types of con- trols with consistent overall policies and plans for development and preservation. If policies, plans and controls can be com- bined systematically and if sympathy for environmental objectives is maintained consistently by citizens and government leaders, there is some reason to be optimistic that the garden of a metro- politan area can be retained. our history with the control of land use and the inherent difficulties and weaknesses of controls,, which we have identified in the analysis, however, indicate that success is far from assured. -325- Bibliography I. AGRICULTURE AND OPEN SPACE Alampi, Phillip (chairman). Report of the Blue Print Commission on the Future of New Jersey Agriculture, Box 1888, Trenton, TT 1) 1973. Berry, David. "Preservation of Open Space and the Concept of Value,," American Journal of Economics and Sociology, Vol. 35 (1976b). Clawson, Marion. America's Land and Its Uses, Baltimore: Johns Hopkins, 1972. Cotner, Melvin, M. D. Skold, and Orville Krause. "Farmland:. Will There be Enough?", ERS-584, USDA, 1975. Dideriksen, Ray. "Potential Cropland: A Regional View," Soil Conservation, Vol. 42 (Dec. 1976), 5-9. and R. Neil Sampson. "Important Farmlands -- A National Viewpoint," Journal of Soil and Water Conservation, Vol. 31 (1976). Ekirch, Arthur. Man and Nature in America, Lincoln: University of Nebraska Press,, 1963. Frey, M. Thomas and Henry Dill. "Land Use Change in the Southern Mississippi Alluvial Valley, 1950-69 -- An Analysis Based on Remote Sensing," USDA ERS Agricultural Economic Report 215, 1971. and Robert C. Otte. "Cropland for Today and Tomorrow," USDA ERS Agric. Economic Report No. 291, 1975. Grover, Carl., The Withdrawal of Resources from Connecticut Valley Agriculture, 1900-1965, unpublished Ph.D. disserta- tion, University of Pennsylvania, 1969. Hart, John Fraser. "Loss and Abandonment of Cleared Farmland in the Eastern United States," Annals of the Association of American Geographers, Vol. 58, 1968, pp. 417-440. -326- AGRICULTURE AND OPEN SPACE (continued) Hays, Samuel. Conservation and the Gos2el of Efficiency, New York; Athenuem, 1969. Heady, Earl. "The Agriculture of the U. S. Sc ientif ic American , Vol. 235 (Sept. 1976). pp. 106-127. Higbee, Edward. Farms and Farmers in an Urban Age, New York: Twentieth Century Fund, 1963. Jumper, Sidney. "Wholesale Marketing of Fresh Vegetables," Annals of the Association of American Geographers, Vol. 64 (1974), pp. 387-396. Lemon, James. The Best Poor Man's Country, Baltimore: Johns Hopkins, 1972. Marx, Leo. The Machine in the Garden, London and New York: Oxford University Press, 1964. Parsons, James. "Corporate Farming in California," Geographical Review (July 1977), pp. 354-357. Prestbo, John (ed.). This Abundant Land, Princeton, New Jersey: Dow Jones Books, 1975. Raup, Phillip. "What is Prime Land?", Journal of Soil and Water Conservation, Vol. 31 (Sept.-Oct. 1976). Schneider, Stephen and Lynn Mesirow. The Genesis Strategy, New York: Plenum, 1976. Smith, Everett. -Road Functions in a Changing Rural Environment, unpublished Ph.D. dissertation, University of Minnesota, 1962. Smith, Henry Nash. Virgin Land, Cambridge, Mass.: Harvard, 1970. Stadtfeld, Curtis. From the Land and Back, New York: Scribners, 1972. Sublett, Michael. Farmers on the Road, Department of Geography Research Paper No. 168, University of Chicago, 1975. _327- Ii. URBANIZATION: PROCESSES AND EFFECTS ON LAND USE Allee, David, et al. "Toward the Year 1985: The Conversion of Land'to UrbaTuse in New York state," New York State College of Agriculture, Special Cornell Series No. 8, Ithaca, 1970. Beale, Calvin. "The Revival of Population Growth in Nonmetropolitan America,," USDA ERS Report ERS-605, 1977. and Glenn Fuguitt. "The New Pattern of Nonmetropolitan PopIulation Change," Center for Demography and Ecology Working Paper 75-22, University of Wisconsin-Madison, 1975. Berry, David. "The Effect of Property Taxes on the Loss of Farm- land: The Potential Effectiveness of Preferential Assessment, Proceedings, Middle States Division of the Association.of @merican Geographers meetings, 1975. ."Idling.of Farmland in the Philadelphia Region, 1930-1970,11 Regional Science Research Institute Discussion Paper Series: No. 88, 1976a. Ernest Leonardo, and Kenneth Bieri. "The Farmer's Response to Urbanization: A Study of the Middle Atlantic States," Regio.nal Science Research Institute Discussion Paper Series: No. 92, 1976. California Office of Planning and Research. "Prime Agricultural Lands Report," Sacramento, 1974. Clawson, Marion. Suburban Land Conversion in the United States, Baltimore: Johns Hopkins, 1971. Conklin, Howard and Richard Dymsza. 11maintaining Viable Agri- culture in Areas of Urban Expansion," New York State Office Of Planning Services, Albany, 1972. Dill Henry and Robert C. Otte. "Urbanization of Land in the Western United States," USDA ERS 429 1970. and "Urbanization of Land in the Northeastern United @_tates," USDA ERS 485, 1971. Fellmeth, R. The Politics of Land, New York: Grossman, 1973. -328- URBANIZATION: PROCESSES AND EFFECTS ON LAND'USE -(continued.) Foster,-John. "Changes in Agricultural Land Use-in Massachusetts., 1951-19711," Massachusetts Agricultural Experiment Station, Amherst, 1976. Gottman, Jean. Megalopolis, Cambridge, Mass." MIT Press, 1961. Harris, Curtis and David Allee. "Urbanization and Its Effects on Agriculture in Sacramento County, California" (2 volumes), California Agricultural Experiment Station, Giannini Founda- tion Research Report Nos. 268 and 270, 1963. Hart, John Fraser. "Urban Encroachment on Rural Areas," Geo- . graphical Review, Vol. 66,, 1976, pp. 1-17. House, Peter. Farmland and Farmland Owners on the Edge of A Grow- ing City, unpublished Ph.D. dissertation, Cornell University, 1969. Kenney, Kenneth. The Residential Land Developer and His Land Purchase Decision, unpublished Ph.D. dissertation, University of North Carolina, 1972. Kimball, Solon. "The New Social Frontier: The Fringe," Michigan State University Agricultural Experiment Station Special Bulletin 360,, 1949. MacConnell, William P. Remote Sensing 20 Years of Change in Massachusetts 1951/52-1971772. Bulletin No. 630, Massachusetts Agricultural Research Station, Amherst, 1975. Martin,, Larry. Land Use Dynamics on the Toronto Urban Fringe, Environment Canada, Lands Directorate, 1975. Miner, Dallas. "Farmland Retention in the Washington Metropolitan Area," Metropolitan Washington Council of Governments, Wash- ington, D.C., 1976. Otte, Robert C. "Farming in the City's Shadow," USDA ERS Ag- ricultural Economic Report No. 250, 19714. Platt, Rutherford,, S. Fernandez, and L. Reynolds. "The Fertile Crescent of Massachusetts: Farmland Policy Issues of the Connecticut River Valley," Connecticut River Watershed Council, Easthampton, Mass. _329- URBANIZATION: PROCESSES AND EFFECTS ON LAND USE (continued) Plaut,,Thomas. "The Effects of Urbanization on the Loss of Farm- land at the Rural-Urban Fringe: A National and Regional Perspective, Regional Science Research Institute Discussion Paper Series: No. 94, 1976. Puget Sound Governmental Conference Regional Agricultural Land Use Technical Study, Seattle, 1974. Raup, Philip. "Urban Threats to Rural Lands: Background and Beginnings," Journal of the American Institute of Planners, Vol. 41, '1975, - pp. 371-378. Shaklee, Ronald. "Kansas City Region Prime Agricultural Land/ Urban Conversion Study," Lawrence: University of Kansas city for Research, 1976. Simonett, David, et al. Land Use Changes and Environmental Quality in Urban Areas: Some Comparative Studies, NTIS PB 220 742$ 9 73. Spaulding, Burt and Earl 0. Hea dy. "Future Use of Agricultural Land for Non-Agricultural Purposes," Journal of Soil and Water Conservation, March-April 1977 (Vol. 32, No. 2), pp. 88-92. Stone, Christopher. "Should Trees Have Standing? -- Toward Legal Rights for Natural Objects," Southern California Law Review, Vol. 45, 1972, pp. 450-501. Strong, Ann L. "Factors Affecting Land'Tenure on the Rural-Urban Fringe," Institute for Environmental Studies, University of Pennsylvania, 1968. Thibodeau, Jean-Claude. "L'Impact de Montreal sur les Zones Ag- ricoles Peripheriques," Institute National de la Recherche Scientifique, Montreal, 1976. VinIing, Daniel and Anne Strauss. "A Demonstration that Current De-ConcentrationPopulation Trends are a Clean Break with Past Trends, Regional Science Research Institute Discussion Paper Series: No. 90, 1976. -330- URBANIZATION: PROCESSES AND EFFECTS ON LAND USE (continued) Zeimetz, Kathryn, Elizabeth Dillon, Ernest Hardy, and Robert C. Otte. "Dynamics of Land Use.in Fast Growth Areas," Agri- cultural Economic Report 325, ERS USDA, 1976. Zelinsky, Wilbur., et al. Population Change and Redistribution in Nonmetropolitan Pennsylvania, 1940-1970, Population Issues Research Office, Pennsylvania State University, 1974. -331- III. LAND ECONOMICS Adams, F. G.0 G. Milgram, E. Green, and C. Mansfield. "Unde- veloped Land Prices During Urbanization: A Micro-Empirical Study Over Time,'I@Review of Economics and Statistics, Vol. 50 (1968), pp. 248-258. Berry, David, and Robert E. Coughlin. "Land and Landscape in the Philadelphia Region: 2025," Regional Science Research Insti- tute Discussion Paper Series: No. 95, Philadelphia, 1977. Boyce, David E., W. B. Allen, and F. T. Tang. "Impact of Rapid Transit on Residential Property Sales Prices.," Space, Loca- tion, and Regional Development, M. Chatterji, ed., Pion, Ltd., Lonjon, pp. 145-153, 1976. Blueprint Commission on the Future of New Jersey Agriculture, Report, Trenton,.1973. Bringham. E. F. "The Determinants of Residential Land Values, Land Economics, 31, pp. 325-334, 1965. Bryant, William. "The Rural Land Market in Wayne County, New 'York." Department of Agricultural Economics, Cornell Uni- versity, Ithaca, 1974. Clonts'. Howard. ".Influence of Urbanization on Land Values at the Urban Periphery,"' Land Economics, Vol. 46, 1970, pp. 489-497. Coughlin, Robert E. and James Fritz. "Land Values and Environ- mental.Characteristics in the Rural-Urban Fringe," Regional Science Research Institute Discussion Paper Series: No. 45, 1971. Crowley, William. "Farmland Use Values Versus Market Prices in Three Oregon Land Markets," USDA ERS Report ERS 5505 1974. Downing,, P. B. "An Empirical Study of Milwaukee, Wisconsin, to Land'Economics, 49, pp. 44-56., 1973. Gaffney, Mason. "Tax Reform to Release Land," in M. Clawson, ed., Modernizing Urban Land Policy, Baltimore: Johns Hopkins, 1973. -332- LAND ECONOMICS (continued) Grether'. D. M. and P. Mieszkowski. "Determinants of Real Estate Values," Journal of Urban Economics, 1 (2), pp. 127-146. Hammer, Thomas R., Edward T. Horn@ IV, and Robert E. Coughlin. "The Effect of a Large Urban Park on Real Estate Values, Journal of the American Institute of Planners, Vol. 40, No. 4, July 1974. Harris, Curtis C. and David J. Allee. Urbanization and Its Effects on Agriculture in Sacramento County, California: Prices and Taxes of Agricultural Land, Giannini Foundation Research Report No. 270, California Agricultural Research Station, 1963. Huschak, Leroy. "The Urban Demand for Urban- Rural Fringe Land.," Land Economics, Vol. 51, pp. 112-123, 1975. Keene, John C., et-al. Untaxing Open Space: An Evaluation of the Effectiveness of Differential Assessment of Farms and Open Space. Prepared for the Council on Environmental Quality, Washington (GPO), 1976. Lindeman, Bruce. "Anatomy of Land Speculation," Journal of the American Institute of Planners, Vol. 42 (2), pp. 142-152, 1976. Mudge, R. R. The Impact of Transportation Savings on Suburban Residential Property Values, University Microfilms, AnnArbor, 1972. Pasour, E. C. "Real Property Taxes and Farm Real Estate Values: Incidence and Implications," American Journal of Agricultural Economics, pp. 549-556, 1973. _. "The Capitalization of Real Property Taxes Levied on Farm Real Estate," American Journal of Agricultural Economics, November 1975, pp. 539-548. Platt, J. Residential Property Value Gradients and Urban Trans- portation Impact, University Microfilms, Ann Arbor, 1972 Plaut, Thomas. "The Effects of.Urb anization on the Loss.of Farmland at the Rural-Urban Fringe: A National and Regional Perspec- tive," Regional Science Research Institute Discussion Paper Series: No. 94, Philadelphia, 1976. -333- LAND ECONOMICS (continued) Schott, L. Ried and Fred C. White. Nultiple Regression Analysis of Farmland Values by Land Classes," The Appraisal Journal., July 1977. Shoup, Donald. "The Optimal Timing of Urban Land Development," PaRers, Regional ScienceAssociation, Vol. 25, 1970, pp. 33-44. Tang, F. T. Detection and Estimation of Transportation Impact with Models of Suburban Residential Property Sales Prices, University Microfilms, Ann Arbor, 1975. Willis, C. F. and B. E. Lindsay. "Land Value Research and Multi- collinearity," Canadian Journal of Agricultural Economics, 23 (1), pp. 75-789 1974. Yang, C. M. Impact of a Rapid Transit Line on Suburban Vacant Land Values, University Microfilms, Ann Arbor, 1976. @-334- IV. LAND USE CONTROLS August, Robert. "Sunderland Zoning By-Law", Massachusetts Heritage, Vol. 13, No. 3, December 1976.- Babcock, R. The Zoning Game, Madison: University of Wisconsin Press. Baker,- R. Lisle. "Controlling Land Uses and Prices by Using Spe- cial Gain Taxation to Intervene in the Land Market: The .Vermont Experience," Environmental Affairs, Vol. IV, No. 3, Summer 1975, pp. 427-480. Barron, James and James Thomson. "Impacts of Open Space Taxation in'Washington," Washington Agricultural Experiment Station Bulletin 772, College of Agriculture,.Washington State Uni- versity, 1973. Barrow, Richard and Bruce Prenguber. '@Transfer of Development Rights: An Analysis of a New Land Use Policy Tool,'.'.,American Journal of Agricultural Economics, Vol. 57, 1975, pp. 549- 557. Bartels, Robert. "A Critical Look at Transfer of Development Rights," SUNY College of Environmental Science and Forestry, Syracuse, New York, 1976. Bennett, Margaret. Transfer of Development Rights: Promising but Unproven New Approach to Land Use Regulation, Philadel- phia: Pennsylvania Environmental Council, 1976. Berry, David and Gene Steiker. "An Economic Analysis of Transfer of Development Rights," Natural Resources Journal, Vol. 17 1977, pp. 55-80. Bills, Nelson. "Extent of Local Efforts to Form Agricultural Districts in New York State.." Journal of the Northeastern Agricultural Economics Council, Vol. 4, 1975. Blueprint Commission on the Future of New Jersey Agriculture, Report, April 1973. Bosselman, Fred and David Callies. The Quiet Revolution in Land Use Control, Council on Environmental Quality, Washington, D.C., 1971. -335- LAND USE CONTROLS and John Banta. The Taking Issue, Washington, D.C.: Council on Environmental Quality, 1973. Bravenec, Lorence L. and Alfred J. Olsen. .."How to Plan Agricul- tural Transactions in Light of the Tax Reform Act of 1976," The Journal of Taxation, March 19.77, pp. 164-169. Brenneman, Russell L. "Private Approaches to the Preservation of Open Land," Waterford, Conn.: Conservation and Research Foundation, 1967. Bryant, William and Howard Conklin. "New Farmland Preservation Programs in New York," Journal of the American Institute of Planners, Vol. 41, 1975, pp. 390-396. Chavooshian, B. Budd, and Thomas Norman. "Transfer of Development Rights: A New Concept in Land Use Management," Leaflet 492, Cooperative Extension Service, Rutgers University, New Brunswick, N.J. Chumney, Richard D. "Farmland Preservation: The New Jersey Ex- perience," Journal of Soil and Water Conservation, September- October,.1976. Conklin, Howard and William Bryant. "Agricultural Districts: A Compromise Approach to Agricultural Preservation," American Journal of Agricultural Economics, Vol. 56, 1974, pp. 607-613. and Richard Dymsza. "Maintaining Viable Agriculture in Areas of Urban Expansion," New York State Office of Planning Services, 1972. Connecticut, Governorls Ta.sk Force on the Preservation of Agri- cultural Land, Final Report, Hartford, 1974. Costonis, John. "Development Rights Transfer: An Exploratory Essay," Yale Law Journal, Vol. 83, 1973. "Fred F. French Investing Co. v. City of New York: Losing ,a Battle but Winning a War," Land.Use Law and,Zoning Digest, Vol. 28, No. 7, 1976, pp. 6-8. Coughlin, R. E., T. Plaut, and A. L. Strong. "The Use of Land Ac- quisition Techniques for the Preservation of Urban Open Space," Report to the Bureau of Outdoor Recreation, August 1977. -336- LAND USE CONTROLS Coughlin, Robert E., David Berry, and Thomas Plaut. "Differential Assessment of Real Property as.an Incentive to Open Space Preservation and Farmland Retention.." Report to the Bureau of Outdoor Recreation, August 1977. Derr, Donn, Leslie Small, and Pritam Dhillon. "Criteria and Stra- tegies for Maintaining Agricultural Land at''the Local Level,, Journa-l-of Soil and Water Conservation, May-June 1977, Vol. 32, No. 3, pp. 118-122. Emanuel, Manuel S. "Rural Town of Eden Uses TDR to Save Agricul- .tural Land,"' Practicing Planner, Vol. 7 (March 1977), pp. 15-18. Ervin, David, et al. Land Use Control: Evaluating Economic and Political EfTe-ct-S, Cambridge, Mass.: 'Ballinger, 1977. Fellment, R. The Politics of Land, New York: Grossman, 1973. Field, Barry and Jan Conrad. "Economic Issues in Programs of Transferable Development Rights," Land Economics, Vol. 51, Nov. 1975, pp. 331-340. Fred F. French Investing Co. v. City of-New York, 350 NE 2d 381. Gaffney@, Mason. "Tax Reforms to Release Land," in Marion Clawson, ed., Modernizing Urban Lan d Policy, Baltimore: Johns Hopkins, 19 71. Gloudemans, Robert. Use-Value Farmland Assessments, Theory, Practice, and Impact, International Association of Assessing Officers, Chicago, 1974. Godschalk, David, David Brower, et al. Defining the Constitu- tional Issues of Growth Man@i_gement., Chapel Hill: The Center for Urban and Regional Studies, University of North Carolina, 19,76. Gowefi,-Max and Robert MacKenzie. "Sunderland: @Preserving Prime Agricultural Land," in L. Susskind, ed., The Land Use Con- troversy in Massachusetts, Cambridge, Mass.: MIT Press, 1975. -337- LAND USE CONTROLS (Continued) Gustafson,,-Gregory and L. Wallace. "Differential Assessment as Land Use Policy: The California Case," Journal of the American Institute of Planners, Vol. 41, Nov. 1975, pp. 379-389. Hady, Thomas and Ann Gordon Sibold. State Programs for the Dif- ferential Assessment of Farmland Open Space Land, USDA ERS Agricultural Economic Report No. 256, 1974. Hagman, Donald G. and Dean Misczynski. "Special Capital and Real Estate Windfall Taxes (SCREWTS) in Canzus: A Phenomenon," National Tax Journal, Dec., 1975, pp. 437-444. "Windfalls for Wipeouts," in The Good Earth of America, C. Lowell Harriss, ed., American Assembly, Englewood Cliffs, N.J.: Prentice Hall, 1974. Hansen, David and Seymour Schwartz. "Prime Land Preservation: The California Land Conservation Act," Journal of Soil and Water Conservation, Vol. 31.(Sept.-Oct. 1976). Healy, Robert. .Land Use and the States, Baltimore: 'Johns Hopkins, 1976. Heeter., David G. "Almost Getting it Together in Vermont," in Daniel R. Mandelker, Environmental and Land Use Controls Legislation, New York: Bobbs Merrill, Inc., 1976, pp. 323-392. Helb, John, Budd Chavooshian, and George Nie-swand. "Development Rights Bibliography," Cooperative Extension Service, Cook College, Rutgers University, Leaflet 533, 1976. Hills, G. Angus. The Ecological Basis for Land Use Planning, Maple Ontario: Ministry of Natural Resources Research Report No. 46, 1961. Joint Legislative Committee on Land Use, Final Report, 202 Public Service Building, Salem, Oregon, Oct. 15, 1976. Just v. Marinette County, 201 NW 2d 761 (Wisconsin, 1972). Keene, John C. "The Effectiveness of Differential Assessment for Preserving Farmland, Urban Law Annual, 1978, forthcoming. -338- LAND USE-CONTROLS (continued) David Berry, Robert E. Coughlin, James Farnam, Eric Kelly, Thomas Plaut, and Ann L. Strong. Untaxing Open Space, Wash- ington, D.C.: Council on Environmental Quality, 1976. Kidder, Tracy. "The Battle for Long Island," The A .t laIntic, No- vember 1976. Klein, John V. N. "Suffolk County Farmland Preservation Program: A Report from the County Executive to the Suffolk County Legislature," September 1973. Kolesar,,John and Jaye Scholl. "Misplaced Hopes, Misspent Millions: A Report on Farmland Assessment in New Jersey," Princeton: Center for.Analysis of Public Issues, 1972. Krasnowiecki, Jan and Ann L. Strong. "Compensable Regulations for Open Space," Journal of the American Institute of Planners, Vol. 29, No. 2 (May 1963), pp. 87-101. Lesher, William G. and Doyle A. Eiler. "Farmland Preservation in an Urban Fringe Area--An Analysis of Suffolk County's De- velopment Rights Purchase Program," A.E. Res. 77-3, Dept. of Agricultural Economics, Cornell University, Ithaca, N.Y. March 1977. Little, Charles E. The New Ore4on Trail, Washington: The Con- servation Foundation, 1974. Litton'. R. Burton. "Aesthetic Dimensions of the Landscape in John Krutilla, ed., Natural Environment@, Baltimor;: Johns Hopkins University Press,'1972. Leeson, Susan' "Urban Growth Boundaries Separate Developable Areas from Agricultural Lands," 1000 Friends of Oregon News- letter, Vol. 1, No. 4, Jan. 1976. Locken, Gordon. Alternative Methods of Estimating the Use-Value of Farmland in New York, unpublished Masters thesis, Cornell University, 1976. Matuszeski, William. "Less Than Fee Acquisition of Open Space: Its,Effect on Land Value,," Philadelphia: Institute of,En- vironmental Studies, 1968. -339- LAND USE CONTROLS (continued) McHarg, Ian. Design with Nature, Garden City, New York: The Natural History Press, 1969. Miner, Dallas. "Farmland Retention in the Washington Metropolitan Areal if Washington, D.C.: Metropolitan Washington Council of Governments, 1976. Myers, Phyllis. "So Goes Vermont," Washington, D.C., The Con- servation Foundation, 1974. Zoning Hawaii,,Wasbington, D.C.: The Conservation Found- ation, 1976. Nieswand, George, et al. Transfer-of Development Rights: A Demonstration, 6-ook College, Rutgers University Extension Bulletin 419, 1976. 1000 Friends of Oregon, Newsletter, (monthly) Portland, Oregon: 1000 Friends, 519 Southwest Third Street. @Pasour, E. C. "The Capitalization of Real Property Taxes Levied on Farm Real Estate," American Journal of Agricultural Eco- nomics, Vol. 57 (1975), pp. 539-548. Platt, Rutherford, "The Loss of Farmland: Evolution of Public Response," Geopraphical'Review, Vol. 67 (1977), pp. 93-101. Plaut, Thomas. "The Real Property Tax, Differential Assessment, and the Loss of Farmland on the Rural-Urban Fringe," Regional Science Research Institute Discussion Paper Series: No. 97, 1977. Real Estate Research Corporation. The Costs of Sprawl, Council on Environmental Quality, Washington, D.C., 1974. The Research Institute of America, Inc. The RIA Complete Analysis of the '76 Tax Reform law, New York, N.Y., 1976. Reilly, William, ed. The Use of the Land, New York: Crowell, 1973. Roe, Charles. "Innovative Techniques to Preserve Rural Land Re- sources," Environmental Affairs, Vol. 5 (1976), pp. 419-446. -340- LAND USE CONTROLS (continued) Rose, Jerome. "The Transfer of Development Rights" A Preview of an Evolving Concept," Real Estate Law Journal, Vol. 3, 1975, pp. 330-358. Saskatchewan Land Bank Commission. Regulations, August 10, 1976. Annual Report, 1973-1976, Regina. Schneider, Stephen H. The Genesis Strategy, New York: Plenum, 1976. Smith, Lawrence B. "The Ontario Land Speculation Tax: An Analysis of an Unearned Investment Land Tax," Land Economics, 52, February 1976, pp. 1-12. Schlaes, Jared. "The Economics of Development Rights Transf-ers," The Appraisal Journal, Vol. 42, 1974, pp. 526-537. Smith, Henry Nash. Virgin Land, Cambridge, Mass.: Harvard Uni- versity Press, 1970 reissue. Solberg, Erling D. and Ralph R. Pfister. "Rural Zoning in the U.S.: Analysis of Enabling Legislation," U.S. Dept. of Ag- riculture, ERS Misc. Publication 1232, July 1972. Sonoma County, California. Central Sonoma County Density Transfer Project, Final Report prepared by Sedway/Cooke, June 1976. Strong, Ann Louise. Private Property and the Public Interest:, The Brandywine Experience, Baltimore: Johns Hopkins, 1975. Suffolk County Select Committee on the Acquisition of Farmlands, "Report to the Suffolk County Legislature," November 7, 1974. Vogeler, Ingolf. "The Effectiveness of Differential Assessment of Farmland in the Chicago Metropolitan Area," Office of Research and Planning, Springfield, Ill., 1976. Wisner, Kenneth E. Effects of__Agricultural Use-Value Assessments in Washington County, Maryland, unpublished master's thesis, University of Maryland, 1971. Woodbury, Steven. "Transfer of Development Rights: A New Tool for Planners,," Journal of the American Institute of Planners, Vol. 41 (1975), pp. 3-14. -341- LAND USE CONTROLS (continued) "Whatever Happened to TDR? A Survey of the Status of Proposals for Transfer of Development Rights," Environmental Comment, February 1976, pp. 13-16. U.S. Department of Agriculture. Perspectives on Prime Lands, Background Papers for a Seminar on the Retention of Prime Lands, July 1975i TA@ 3 6668 00001 2817