Ranching on the Rural-Urban Frontier

A desire to live on the edge. By Jeff Goodson

One of the nastiest battles in the American land wars is now taking place on the outskirts of every city in the country. The environmentalists, drunk on land lust and still delirious from eight years of wholesale land acquisition in cahoots with the Clinton administration, are pushing one of the greatest public relations campaigns in history. The campaign is "smart growth," also known as the war on urban sprawl. The battleground is the rural-urban frontier, the land just beyond the suburbs where old family ranches increasingly find themselves in the crosshairs of the land snatchers. If you ranch within 50 miles of a city, watch your pocketbook.

City, Suburb and Range

America's cities grew dramatically in the 20th century, expanding fastest in conjunction with four technological revolutions. The first was the electric streetcar at the end of the 19th century, followed by the automobile in the early 1900s and the freeway network after World War II. The fourth, the electronics revolution, has cut the last umbilical cord and finally freed millions to live where they want-somewhere else.

It doesn't take a genius to figure out why people move out of America's cities. On the one hand, they're driven out by urban blight, astronomical crime rates and pathetic public education systems. At the same time, they are drawn to the suburbs by bigger, more affordable and better quality houses, on more land, with good schools, lower taxes, safer streets and better public services.

Fortunately, in America there has always been plenty of room to accommodate people's desire to live on the edge. All developed infrastructure combined in this country-the houses, buildings, stores, roads, military bases and commercial buildings-take up only about five percent of the total land area of the continental United States.

Contemptuous of people's wishes, however, environmentalists see urban sprawl as a problem in search of a solution. The solution as they see it is to keep rural land from being developed, and to keep people bottled up in the hell of the cities. They don't actually want to buy the land they covet at fair market value, of course; in fact, they don't actually want to own the land at all. They just want to control the use of the land, and let their neighbors pay taxes on it.

The Tool Box

Environmentalists like to talk about their "tool box"-the collection of laws, rules and regulations they employ to keep landowners from using their property. The tool box they bring to the rural-urban frontier is the size of a hardware store. Better known as zoning on Viagra, smart growth employs the standard litany of property control measures: environmental easements, purchase of development rights, the Endangered Species Act, wetlands regulations, historic preservation restrictions, floodplain regulations-the usual suspects.

But it also includes a range of tactics that is unfamiliar to most rural Americans. These include comprehensive planning laws, obligatory land use plans, low density zoning, downzoning, greenlining, urban growth boundaries, annexation limitations, farmland protection initiatives, development referenda, construction moratoriums, building permit caps, cluster development requirements, development impact fees, "adequate public facilities" legislation, sewer bans, transportation controls, special aquifer impact controls, tree ordinances, targeted real estate taxes, impervious cover limits, hillside development controls, stream corridor building restrictions and water availability laws.

The feds are also in the game, of course, with the biggest tool in the box-proposed transportation legislation that would make receipt of highway funds conditional on local compliance with whatever smart growth principles are fashionable at the time.

Urban Sprawl & Property Value

With the growth of America's cities, more and more landowners find themselves ranching on the new frontier. It's a mixed blessing. Distances to markets are shorter; infrastructure is better; access to services is superior; and land values are higher. But the intensity of environmental activism is also far greater, and its impact on property value can be dramatic. It works like this:

When cities grow, land prices increase as the "highest and best use" of land changes from agricultural to residential or commercial use. This increase can make the horses buck. It's not unusual, for example, for developers to buy a ranch at 20 times its agricultural value. For most ranchers-especially where protected from property tax increases by agricultural tax exemptions-rising land values are naturally viewed as a positive impact of urban growth because of the wealth they add to the family estate.

Depending on how you play it, urban sprawl can also be the ticket to a new American dream. In California in the late 1990s, sprawl from Los Angeles led many Chino Valley dairy farmers to sell out and build much larger and more efficient dairies elsewhere. Farmland worth as much as $100,000 an acre was sold and dairy operations moved to land costing only $2,500 an acre. "What made all this possible was the money the farmers got from selling their land in Los Angeles.... The process of urbanization pushed the land prices up so much that it accelerated the growth of the industry." As one farmer put it: "It makes wise from a business perspective."

Creating Losers

In the absence of property use controls, very few frontier properties lose value as cities expand. Smart growth, however, creates lots of losers. If you're lucky, and your land can still be developed, then the value can increase even more because of the increasing scarcity of development land. But if the highest and best use of your property is taken by greenlining, downzoning or other smart growth initiatives, then the value of the land craters because the highest and best use is reduced to nothing but open space.

A good example of this is Austin, Texas. In recent years, endangered species habitat created a shortage of development land on the edge of the city by rendering large areas of property unusable. The value of the property contaminated by habitat was destroyed of course, while the value of uncontaminated property increased. There are a thousand variations on this theme now playing out in every corner of the urban American landscape.

Blowback

Perhaps the biggest irony of smart growth is that land development restrictions often have just the opposite effect of those intended: more crowding, more traffic congestion, longer commute times, higher infrastructure costs, more urban air pollution, more urban water pollution, scarcer land availability, less urban open space, higher buildable land prices, higher housing prices, adverse impacts on historical areas, reduced landowner borrowing power, and discrimination against lower-income citizens, just to name a few.

Smart growth also typically pushes people further out from the city, where land prices are cheaper-much the way a balloon responds when cinched in the middle. In the Washington, D.C. suburbs, people have responded to restricted development by moving out as far as West Virginia. But they still commute to Washington every day, exacerbating all of the problems that environmentalists thought they were fixing in the first place.

Sweetheart Deals

At the same time that environmentalists try to keep people bottled up in America's cities, they've been cutting sweetheart deals with themselves to buy prime rural acreage at deeply discounted prices. The Nature Conservancy (TNC), for example, recently caught hell for buying raw land, attaching development restrictions to it, and then selling it to TNC trustees as homesites at a fraction of the land's original value. The trustees would then make a donation to TNC in the amount of the discount, and write it off on their federal income taxes. TNC finally ended the practice-at least temporarily-in the face of massive public outrage. (See page70)

Ballots and Lawyers

Not surprisingly, landowners are starting to fight back against this kind of property abuse. In Clarksville, Georgia, outgoing county commissioners passed a motion to eliminate the county planning commission and county land-use plans altogether. In Berthoud, Colo., voters recently considered a petition to remove a five percent building permit cap that had recently been approved. In Erie, Colo., there was a campaign to remove the mayor for "abandoning Erie's efforts to secure economic development." And in Virginia's Fairfax County, a recent election brought a new board chairman to power who reversed many of the restrictions established over a decade ago.

Litigation is also popular. In Loudon County, Tenn., over 150 lawsuits were filed in 2003 by builders, developers, longtime landowners and last-minute investors, seeking to overturn new county slow-growth initiatives. But litigation needs to go beyond simply rolling back property control laws that are passed in the name of smart growth. This kind of property abuse will only be stopped when those responsible are held personally liable for the damage they cause.

No Free Lunch

The biggest destroyer of wide open spaces isn't developers. It's the death tax that drives people to break up the family ranch in order to pay the taxes. America is witnessing the biggest intergenerational transfer of land in history, and many ranchers in the crosshairs of smart growth initiatives are part of the "greatest generation"-born into the Depression, veterans of World War II, and victorious in the cold war. Now in their golden years, when they should be surveying with satisfaction all that they spent a lifetime building, they're instead besieged by an enemy more insidious than those they spent a lifetime defeating. It is an enemy that uses the fiction of smart growth to cheat them out of the family estate.

The one commandment for playing the property control game in America is clearly articulated in the Fifth Amendment of the Bill of Rights: "nor shall private property be taken for public use without just compensation." When government takes the use of property, it takes the property. If government wants the use of private property on the rural-urban frontier, let government pay fair market value for it. *

Jeff Goodson is president of JW Goodson Associates, Inc., a property consulting company. He can be reached at jwgoodson@aol.com.

Winter 2004 Contents

© 1998-2005 RANGE magazine. All rights reserved. | For reprints, permissions or general questions, contact

Brought to you by RANGE magazine