Related Pages

List of stories about Growth Management Act in San Juan County

Economic Impact of downzoning
most likely minimal

posted 06/00
What is the economic impact if land in San Juan County is downzoned? Who gets hurt and what can be done to mitigate the negative effects?

Those were the questions San Juan County Senior Planner Pat Mann attempted to answer in a staff report to the BOCC June 5.

Collaborating with the county Assessor's office, Mann compared similar properties. Comparisons were made through the assessed value of a property rather than through sale price.

"The analysis of density and divisibility effects indicates that very little loss in property value would be expected to result from downzoning," Mann wrote. A loss in the range of 10-20 percent was predicted for most downzoned properties.

The exception to that rule is for land which is ready to develop. Land with sewere and water and near a road, could see a loss of value from 25 to 50 percent.

Besides economic impacts, other effects would be loss of the ability to divide property and sell parcels as a form of a savings account.

Mann wrote: "Purchase of land for other than direct business ...or residential use is an investment that has potential risks and rewards....The county has no legal obligation to protect people from such risks or guarantee them rewards from these investments."

Mann suggested several mitigation methods to allow for property division in hardship cases.

Loss of the ability to divide property to give to offspring is another impact of downzoning. Mann suggested perhaps some kind of exception could be made for long-time islanders who fall into this situation. He cautioned that there are legal issues involved with making a separate class of property owners.

One effect of downzoning will be an increase in property values county-wide, since the availability of parcels was decreased. While property owners usually welcome an increase in their investment, the corresponding increase in property taxes can lead to hardship for older citizens on fixed incomes.

Tax breaks for senior citizens with incomes below a certain level are already in place. Other options could include a limit on property tax increases from one year to the next.

Two of the three county commissioners are interested in pursuing TDRs.

TDR primer

Just what are transferrable development rights (TDRs) and how do they work? According to San Juan County Prosecutor Randy Gaylord a TDR is a government authorized program to use financial incentives to direct land use control and development.

Local government controls who can sell and who can purchase TDR certificates. Seller are located in "sending areas" which are targeted for preservation and loss of development rights.

Buyers are located in "receiving areas," places where development is considered desirable. The BOCC would identify the receiving and sending areas through a public process.

The price of TDRs is the amount a willing buyer will pay and a willing seller will accept. The price of a TDR has no relationship to the cost of land or the market value of the loss of development rights. The price is determined by the supply and demand.

In Island County, only two TDR certificates were sold in the first seven years of the program.

Gaylord estimates it would take a two or three-person staff to administer a TDR program in San Juan County.

He cautioned the BOCC that creation of a TDR certificate creates risk for the county. TDRs represent fixed interest in property. If the county were to terminate the program, it most likely would have to compensate the holders of the TDR certificates.

Gaylord wrote in his report to the board, "If the county chose to discontinue or modify the program in the future, it may be liable to pay for takings and acquiring all certificates that are issued and outstanding."

If the county commissioners want to proceed with a TDR program, Gaylord suggests they put it on the work plan and wait until after the county's response to the hearings board is finished.