I had a chuckle yesterday morning when reading in the O about the opposition simmering in response to Washington County’s consideration of forming an Urban Renewal district to pay for roads, sewers and other infrastructure for the North Bethany UGB expansion area.
I’ve actually been party to discussions at MPAC about using urban renewal as a tool to advance development of centers (unlike Portland, which is very close to the legal limit on the percent of the City in districts, many local governments have not utilized this tool extensively) and it’s not an unreasonable strategy.
But the chuckle came on two fronts:
1) When Portland forms a district, it’s typically the county and school district that complain about losing revenue. Here it’s the fire and parks districts, since those are not city functions as they are in Portland. So you have more governments to argue with :-)
2) The definition of blight has now apparently been extended to include “doesn’t have roads”. I’m beginning to agree with the cynics who say anything can be declared blighted. Maybe we can created a definition of blighted for not having bike lanes and curb extensions :-)
But after the chuckle there’s a more serious point I want to make: adding infrastructure is not free just because you’re on the edge. The federal subsidies that used to make this easy are gone, and local government has to look deep into its own pockets to fund the cost of growth. Generally growth in centers, where sewer lines and roads are shorter, because densities are higher, is going to be the more cost-effective way to go.
30 responses to “Blighted Farmland”
Chris: Generally growth in centers, where sewer lines and roads are shorter, because densities are higher, is going to be the more cost-effective way to go.
JK: If centers are so cheap, how come Portland is spending $220 million +interest and over-runs to make the North Macadam district happen? I put that at over $500,000,000 for a stated 5000 homes. That is around $100,000 per home in city money for those high rise concrete tombs. That would buy you 2/3 of an average home in Houston and used to in Portland too (inflation adjusted) before the planners took over.
As to lower cost, I found three reports with real data, not someone’s nice theoretical dream:
1. AFFORDABLE HOUSING COST STUDY, An Analysis of Housing Development Costs In Portland, Oregon done by people from the Housing Development Center; Bureau of Housing and Community Development and a Master’s Candidate in Urban & Regional Planning,
2. Metro Urban Centers Report commissioned by Metro.
3. Metro Power Point on The crossings
4. Metro Power Point on the North Main Village
All of these find high density construction more expensive than conventional. All are linked from: DebunkingPortland.com/Smart/DensityCost.htm
As to laying water, sewer and power lines: If we are talking vacant land, then shorter is cheaper. But the more likely case is building in an existing areas where the streets have to be torn up, old pipe removed and new higher capacity pipe installed, then the streets re-paved. Some of that is probably how the city spent over $100 millon so far on the Pearl and expects to spend over another $100 million.
One other detail: In the old days, when builders built what people wanted, instead of what planners demanded, the builders paid for the water, sewer and streets as part of the cost that went into the selling price of the home. But now the cities have to pay for this in order to get high density built because it is so un-economic. (ie: the Pearl; North Macadam). Be sure to read the introduction / summary of the Metro Urban Centers Report it lays all this out.
Thanks
JK
Chris it is possible for the developers to put in roads and sewers. It was common previously for that to happen. Check out the book the Builders and the Voluntary City both have examples of developers doing just this. No reason it cannot be done today.
MW
it is possible for the developers to put in roads and sewers.
Developers do often pay for these things for their own development. And system development charges pay for some of the costs of the broader public infrastructure that supports them.
The problem is that much of the public infrastructure needs to be in place before development can start. You can’t build the development with roads in it, pay the system development charges and then wait to have government build the sewer and roads you need o connect to. And if you wait until someplace is built out to buy park land and open space you are going to pay through the nose if you can find any to buy.
And then there are costs of growth which simply aren’t covered by system development charges, like schools, public services like fire and police stations, etc.
Costs are more than just construction. There are costs over time as well.
Some times, building it the cheapest way possible up front is not the best investment long term.
In the case of North Bethany, as with other “plans” it is Metro/county requirements driving up the costs.
There are also many other parcles either recently brought into the UGB or next to the UGB with infrastructure ready for developers.
Most often develeopers pay for all of their off site approach streets atc and are required to take utilities to and through their project to serve the future. Along with the enormous fees they pay big time. No subdisies!
North Bethany is Metro farce now screaming for that worn out credit card Urban Renewal theivery of basic services. The same credit card Adamas wants to further abuse for more streetcars.
Hypocritically is the reality that Metro’s/Wilsonville’s urban village “Villebois” is using about $100 million in Urban Renewal causing the exact same drain the North Bethany idea would cause.
There are countless pieces of land near schools and employment where grand schemes, massive infrastructure and public subsidies are not needed but our central planning gurus have better ideas?
Pat, OK, I’ll bite. Which other areas recently brought into the UGB or next to the UGB already have roads, sewers and water mains ready for developers to hook up to?
I agree that the infrastructure is probabaly too fancy and expensive but I don’t really understand Metro’s logic here. Bringing this 800 acres into the UGB increased its value from about $20,000 per acre to over $500,000 per acre (around $384,000,000 in gain). If the developers are required to put in $250,000,000 into the infrastructure then the land owners can just reduce the price of the land by $312,000 per acre to $187,500 per acre. I don’t know about you but if I owned farm land worth $20,000 or even $50,000 per acre and could suddenly sell it for $187,500 per acre I would be thrilled.
I believe the area around Witch Hazel school in South Hillsboro is has the infrastructure as do the expansion areas around Oregon City. The expansion area around South End Road in Oregon City has everything (water, gas, roads, electric, cable, etc.) except a sewer pump station but the city has not even started the “planning process” even though it has been in the UGB for five years and Metro has granted them the money.
I note that an update article today has one of the developers pegging the North Bethany infrastructure costs at $75,000 per home, not so different than the $100K number JK pegs for South Waterfront (which is not to say I accept JK’s math, and also note that SoWa has a significant economic development component in addition to housing).
nwjg makes an interesting point about the value UGB expansion creates for the landholders (a “giving” contrasted with “takings” that people complain about). There have been several proposals about trying to capture some of this to use for infrastructure, but it’s a very politically touchy question.
Oops, left out the link to the new article:
http://www.oregonlive.com/news/oregonian/index.ssf?/base/news/118714651911550.xml&coll=7
It really isn’t a “givings” issue. It is just like any other property’s value. If you owned an infil lot in NE Portland that was worth $200,000 but needed to have a garage torn down and a sewer line moved to build a house on it it would be worth $200,000 LESS the cost of the demolition and sewer work. You wouldn’t expect the city to do the work and charge someone else would you?
These people’s land is worth $500,000 per acre less the cost to make it development ready. They are just trying to get the other citizens to pay for the “get it ready” part like in SOWA when it should be their expense. If the cost to get it ready is too much then it should just stay farm land. This kind of calculations should be going on all over and the most financially feasible land should be the land being developed. Instead a political process at METRO is saying “develop here only” and we’ll pick up the tab.
But an urban renewal district is essentially a way to have the local property owners pay for their infrastructure isn’t it? Essentially you sell bonds against the future property tax revenue that will be generated by the resulting development to pay for the infrastructure.
“Last week, about 50 Tucson-area residents representing business and governments came here (to Portland) looking for clues (how to manage growth).”
This line is from an opinion piece in the Arizona Daily Star, Aug 12th. http://www.azstarnet.com/opinion/195996
It’s a pretty good read I recommend.
As I have a connection to things Arizonan, I gave some thought to development needs there and concluded high-density mid-rise development is ideal though lacking in Arizona cities and suburbs.
Single-story, single-family housing on large lots creates too little shade. Arizona is sunny and hot. Collections of mid-rise structures, whether housing or whatever create enough shade to provide cooling and more generous landscaping.
Just as the Portland area implements higher densities for economic advantages and quality of life standards, higher densities and more economically diverse, mixed-use development in cities that suffer from extreme climate conditions may be even more essential, no matter the upfront or supposedly contrived monetary costs.
JK: But the more likely case is building in an existing areas where the streets have to be torn up, old pipe removed and new higher capacity pipe installed, then the streets re-paved. Some of that is probably how the city spent over $100 millon so far on the Pearl and expects to spend over another $100 million.
You might be interested to know that part of the reason North Bethan will be so expensive is because a lot of roads need to be torn up, land bought, and the roads expanded (in “south bethany”) because of all the traffic generated in North Bethany.
It really isn’t a “givings” issue.
If a change in government zoning increases your property value from $20,000 to $500,000 per acre (and when you have been enjoying a property tax break for the previous agricultural zoning), that’s a giving!
Chris mentioned an Oregonian article.
Oregonian: Without some subsidy, the cost for roads, sewers and other infrastructure could come to $75,000 for each home if the development has to pay the entire cost
JK: What the hell is wrong with the home owner paying all of their costs (and NO MORE)?
As I see it, it is a case of the city wanting something so bad that they just shove money at it to make it happen. Like the Pearl and like the SoWhat. They could just say no!
Read the intro pages in Metro Urban Centers Report commissioned by Metro. It pretty much exposes the game. High density is too expensive, the politicians want it, so they have to pay for it until they figure out how to drive up the cost of land to the point that is it economic. see: DebunkingPortland.com/Smart/DensityCost.htm
Oregonian: Brown said there are about a dozen other new fees and taxes being considered to make up the funding difference, including a real estate tax, gasoline tax, creating a special taxing district and even increasing Oregon’s vehicle registration fees.
JK: Why should others pay the cost of newcomers – let them pay their own way.
Don’t Californicate Oregon!
Stop Californicating Oregon!
Thanks
JK
I’ve talked to those estimatng the costs per housing ubits and they say much of it is Metro’s excessive requirements whihc mandate hiogher densities, mixed use and all sorts of “smart” things.
This is a grand costly scheme, not unlike Damascus, whihc is supposed to be a substitute for allowing many other parcels develope.
Areas 64, 65 and many other pieces of land sit adjacent to infrastructure ready for added use.
There is no comprehensive consideration from Metro on these matters at all. It is indeed chaos.
Here we have yet another so-called “smart growth” plan which calls for enourmous public subsidy,,,, with the usual attempts to explain away the problems and justify the expense.
Chris, your apparent lack of awareness of the countless acres of land readily available with only our planners standing in the way, speaks volumes about your perceptions.
The sweeping EFU label and lack of planning, needlessly ties up marginal land indefinetly even when it makes enormous sense to develop.
Like when it’s near schools and employment.
But Metro is blind in this regard as they cling to faulty theories and notions which spawn North Bethany, Damascus, Villebois, SoWa and other costly misadventures that do not provide a proportianate benefit.
And of course here we go with another Urban Renewal basic services money grab to pay for another one.
I’ll guess the only reason this one is getting some critisizing attention is because there isn’t any light rail, commuter rail or streetcar included.
Other than that the exact same UR scheme has been used over and over again for the same thing. Nearly identical is Villebois in Wilsonville. The whole county is helping to pay for that development in the exact same ways described in the North Bethany piece.
Peter W Says: You might be interested to know that part of the reason North Bethan will be so expensive is because a lot of roads need to be torn up, land bought, and the roads expanded (in “south bethany”) because of all the traffic generated in North Bethany.
JK: If it has enough roads to make ripping them up significant, it doesn’t sound like vacant land to me.
Thanks
JK
Ross Williams Says:
“But an urban renewal district is essentially a way to have the local property owners pay for their infrastructure isn’t it? Essentially you sell bonds against the future property tax revenue that will be generated by the resulting development to pay for the infrastructure.”
Absolutely not. It is a way for these areas not to contribute to police, fire, schools, etc. thereby increasing the costs to the rest of us.
Chris Smith Says:
It really isn’t a “givings” issue.
If a change in government zoning increases your property value from $20,000 to $500,000 per acre (and when you have been enjoying a property tax break for the previous agricultural zoning), that’s a giving!
No, it more resembles a restoration. If you had a basket of french fries and I took 90% of them and, later on I put most of them back would you say I “gave” you french fries or I was a mooch that took some?
Absolutely not. It is a way for these areas not to contribute to police, fire, schools, etc. thereby increasing the costs to the rest of us.
I don’t think that is really accurate is it since if the development doesn’t happen there is no tax revenue? I think the question is whether getting development going where the economics don’t work by themselves serves a public purpose.
If he development doesn’t happen there are no houses to burn, kids in school, cars to be broken into, domestic violence, etc. therefore we non urban reneual tax payers are not on the hook for those costs.
The answer to your question is no. If the “economics” don’t work the public is better served without the development. Go back and take Econ 101 again. That is how an economic system decides if the pubic interest is served. That being said, I still don’t see why, if these farmers want to sell the land, that $185K per acre is not enough. Why should the rest of us pay for the on-going services there so they can pocket the $500K per acre? How is that a “public purpose”?
“If you had a basket of french fries and I took 90% of them and, later on I put most of them back would you say I “gave” you french fries or I was a mooch that took some?”
Yes I’d call you a mooch that took some in the first place. But your analogy isn’t very good. Back when the UGB was first drawn, that land was worth more as farmland than as houses, (how do I know? Cause there was some guy farming it, not trying to build houses on it. If it had been worth more as houses, the farmer would have sold it to become houses already.) Since then, the city has expanded up to the edge of that area, and then included that area. So the analogy is that you had a small fries, and a bunch of your neighbors were given large fries, and then one day they gave you a large fries too. In other words, a “giving,” since you only bought a small fries in the first place…
If you had farmland that might someday be in the path of development and that future potential is take away, regardless of its value you are still worse off than if they had just left you alone.
If you had farmland that might someday be in the path of development and that future potential is take away, regardless of its value you are still worse off than if they had just left you alone.
I think you miss something. One of the purposes of the UGB was to protect farmers by not allowing the neighboring farmer to put up houses. Because once the houses went up the voters in those houses would not appreciate the industrial needs of farming.
In other words, the UGB protected the value of that farmland as farmland for a very long time. And I don’t know what would happen to the value of that land if everyone could develop. My guess is that the first development would be every lot already on an existing roads. But I am willing to bet trying to farm in Washington County would become dicey at best.
But there is no need to protect farm land. We have far to much now. We pay farmers not to farm.
Farmers should not polute neigboring land and if they do the neighbors should complain. Farms are a huge polution source.
This area of Bethany is not really what you would call “industrial farm land”. It is mostly small hay fields, nursury, christmas trees or woodlots.
“If you had farmland that might someday be in the path of development and that future potential is take away, regardless of its value you are still worse off than if they had just left you alone.”
Indeed. I feel the same way about the law that say I can’t turn my house into a drive-thru restaurant. I should be able to do what I want with it, and who cares that drive-thru restaurants generate a bunch of traffic and have people idling their cars with the windows rolled down and their stereo turned up at all hours of the day and night, the potential exists someday for my house to be turned into a drive-thru, and if the city says that I can’t, well then they are clearly stealing my land from me and that isn’t fair.
But my neighbors? No, they need to stay houses. And please keep them no more than 2 stories, no broken down cars, and mow your lawns regularly. And if I see cars coming and going at all hours of the day and night, I’m going to assume you are selling drugs and I’ll call the cops. Otherwise they would hurt my resale value.
“But there is no need to protect farm land. We have far to much now. We pay farmers not to farm.”
No we don’t. That last time we did that was 1993, and we are probably never going to do it again in the future, there are too many people on this planet.
“Farmers should not polute neigboring land and if they do the neighbors should complain. Farms are a huge polution source.”
While I agree in principle that what happens on a property should stay on a property, it doesn’t, and it isn’t just farmers that have that problem. In any case, the pollution from a farm, (like dust from plowing,) isn’t bad pollution from a neighboring farm standpoint. However, the average homeowner seems to get a lot more upset about that stuff. Likewise, the pollution from houses, (weird GM grass seed, and way more chemicals than any right thinking person should ever apply to a piece of land that small,) isn’t as big of a deal to a neighboring house as it is to a farm…
“This area of Bethany is not really what you would call “industrial farm land”. It is mostly small hay fields, nursury, christmas trees or woodlots.”
Where are people going to get their Christmas trees, their hay, their wood? Somehow, life would be better if it had to be shipped from further away? And those nurseries are some of the highest value farmland in the state, they grow the vegetable starts that people like me then plant in our yards, and I’m willing to pay a lot of money for that stuff, I’ve harvested over 5 lbs of broccoli from my $2 worth of starts, (and I have more growing.) You won’t find 40 cent/lb broccoli in the store, but even if I had to pay $3 for those starts, it would still be a very good deal…
But there is no need to protect farm land. We have far to much now.
What happens when fuel costs or changes in the currency values or overseas labor costs shift the balance to home-grown crops again?
What happens when we need to start growing our fuel rather than mining it?
What happens when there’s a global surge in demand for timber products or other industrial fibers due to rising standard of living in China and India?
We can’t just look at today and waste land that might well be needed in the future.
And if we are seriously interested in making sure Oregon has a sustainable future, we’ll make sure we’ve banked enough farm and forestland to sustainably feed and clothe three or four times our current population, and to fuel vehicles and heat homes for all of them. (We might never need that much agricultural capacity, but better to have it and not need it than to someday need it and find we paved over most of our good farmland to line some developer’s pocket.)
When it comes to land use, we need to be thinking fifty or a hundred years ahead, and keep in mind worst-case scenarios regarding food, fuel and fiber supply.
Chris Smith:
The definition of blight has now apparently been extended to include “doesn’t have roads”. I’m beginning to agree with the cynics who say anything can be declared blighted.
Bob T:
In a case a few years ago, a local government wanted new condos to face the new golf course
that was getting put in at the edge of town. They had to redefine “blight” to include “having no garage” or something, and then proceeded to
evict scores of retired people from their well-kept homes there.
This is the result of people (mostly progressives) who didn’t give a darn about property rights. Now Fat Cats and corporations know they can get government to give them any land they wish to have. “Public Use” is also defined as “anything a state or local government
says it is”. Well, you were warned. But now let’s work together.
Bob Tiernan
Peter W Says: You might be interested to know that part of the reason North Bethany will be so expensive is because a lot of roads need to be torn up, land bought, and the roads expanded (in “south bethany”) because of all the traffic generated in North Bethany.
JK: If it has enough roads to make ripping them up significant, it doesn’t sound like vacant land to me.
Peter: JK, I said “south bethany”. The expensive roadwork isn’t new roads built on the vacant farmland, it is things like widening Bethany Blvd, Kaiser, and 185th south of the project site because of all the new traffic that will drive down those roads.
See:
http://bethanyplan.org/images/07.06.07transportationassessment.pdf