It's not sexy and it's not part of this year's green agenda, but it could save 500,000 acres of working farm and forest in central Puget Sound. Oh, and this dramatic new approach to preserving open space is probably constitutional.
The Cascade Land Conservancy has drafted — and Rep. Larry Springer and Sen. Scott White have introduced — legislation, HB1469 and SB 5253, that would set up a system to transfer development rights from working farms and forest — and, if counties choose, other rural land of ecological significance — to urban developers, who could, within willing cities, build at higher densities. The sale would take place either directly, perhaps through private brokers, or through a city or county that would bank the rights and then resell them.
Under these transfers, a common practice for preserving rural land, the landowner would get the money and thus not be tempted to turn rural land into real estate developments. The developer would profit from being able to build more units than the zoning in a city “receiving area” currently allowed. So far, it's all pretty standard stuff, and it's already being done, although not much.
The "not much" is the reason for the novel twist of this proposed legislation. The new incentive is this: The receiving cities could issue bonds against the increased property-tax revenue that denser development would generate in an area around the development. The city could use the bond proceeds to build infrastructure that would both accommodate new people and, potentially, ameliorate the effects on people who already live there.
Developers would still have to pay impact fees, but those fees — substantial though they are — don't pay the full cost of serving new development. For counties, it would also avoid the expense of extending infrastructure and providing services to thinly populated outlying areas. King County supports the legislation.
Under the law as established 10 years ago by Tim Eyman's Initiative 747, a taxing jurisdiction can increase its overall property tax revenue by no more than 1 percent a year, so that if it collects more taxes in one place, it must collect less, on average, everywhere else. New construction, however, allows the jurisdiction to bump the base up.
This mechanism for saving forests and farms would require no new regulations, no new taxes, no new net government expenditures. Therefore, it avoids the resentment and backlash that regulation and new taxes currently provoke. And it avoids the weakness of regulations, such as zoning restrictions, that tend to be undercut by economic and political pressuresover time, and circumvented by people and companies with large enough budgets for legal fees.
It wouldn't work just anywhere — or any time. CLC president Gene Duvernoy and Seattle attorney Gerry Johnson, who chairs the CLC's advisory council, explain that you need both population growth — you won't get much interest in transfering development rights if there's no development — and constraints on growth, so that the legal framework puts a premium on adding density in cities, rather than permitting low-density sprawl.
The proposed legislation assumes current zoning. The number of units available in each “sending area” would be based on the number that could be built now. The whole scheme works only under that assumption. At current zoning, cities would have to absorb only about 18,000 new dwelling units. The development rights would cost no more than about $2 billion. If one were to assume upzoning, both the number of new units and the cost would become prohibitive.
Current zoning permits only one house per 80 acres on east King County's resource lands, but no one really thinks that even such low-density zoning by itself can hold the line. Experience shows that if houses are actually built in such places, new residents soon exert pressure on the farmers or timber owners to stop running tractors or chain saws in the early morning; landowners are expected to preserve the open space without generating any income from it. Then, the landowners themselves start generating pressure to upzone, and pretty soon, there goes the neighborhood. A market for development rights enables current owners to keep doing what they're doing, and may give them enough additional cash flow to justify the underlying value of their investment.
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