Farmland Sprouts In Value

February 14, 2003
Text Size:
GRAND RAPIDS — Kent County will soon issue a new equalization report that is likely to show the value of farmland has risen by double digits over the past year, a gain over the last 12 months that can only be rivaled by rising health care premiums.

Still, this year's rise will fall far short of last year's. (See related story.)

An increase of 11.6 percent is expected, due to the fact that agricultural land is being assessed by its developmental price tag instead of its crop production value.

When development values rise faster than use values, then the asking price to buy the development rights also rises.

For the county, the increase means higher costs for its Purchase of Development Rights (PDR) program, as the program would pay a farmer the difference between the two values to keep the land in farm production.

"Increasingly, farms are being assessed at development value instead of agricultural value," said Assistant County Administrator Al Vanderberg.

"And as those assessments increase rapidly, I think it would create more incentive for someone to either sell their land for development or to sell the development rights to the county per the PDR program," he added.

Vanderberg was the point man for the county in putting together the PDR ordinance commissioners approved in December, despite objections from Realtors and homebuilders.

But so far, the county hasn't allocated any funds to the program and is continuing to look at outside sources to do so. When commissioners approved the ordinance, they vowed not to use tax dollars to buy development rights.

"Right now, the program would have to be funded by township allocations," Vanderberg said. "There is federal money that is available that is administered by the state. Also, there have been some foundations and land conservancies that have been active in the area of development rights purchase."

Commissioners approved the ordinance, which doesn't apply to all the farm acreage in the county, in an effort to preserve the local ag industry. A township has to ratify the PDR before a farmer with property in that township can take part in the program. If the county does buy the rights for the PDR, the farmer can continue working the land and also get an assessment break on top of it.

"The other major benefit to the PDR is that the land is then assessed at ag value instead of development value," said Vanderberg. "Michigan is one of only two states in the country right now that assesses farm property at its development value instead of its use value."

Vanderberg said each PDR application would be judged on its own merits. No one has applied, yet.

Although the growing gap between those values is likely to have an impact on the PDR, it hasn't affected the regional planning efforts of the Grand Valley Metro Council.

"Not yet," said GVMC Executive Director Jerry Felix. "But it might."

If the rates rise enough, an increase would dramatically add to the cost of a development and would affect the quantity of affordable housing in the community.

"The other factor is, for example, if the county is indeed going to buy farmland property (rights), where is it going to be and can the county afford it, from the PDR standpoint? That impacts the location of where some future parkland may indeed be," said Felix.

"If development rights are purchased, it wouldn't necessarily be parkland," he added. "But where would you maintain that agricultural open-space land? So that has an impact on where that will all go."

The Metro Council is getting ready to unveil its new landscape map, which charts the existing conditions in its planning region. Planning discussions at the sub-regional level are getting underway this month and will continue into April.

"Any plan we do has to take the marketplace into consideration: What is the marketplace for the land?" said Felix.

Factors that shape an answer to his question include the demand for housing, zoning codes, whether utilities are available, septic issues, soil conditions and transportation links.

"There are a lot of impacts that go on that we can't really predict yet at this point," said Felix. "But rising farmland values certainly have an impact on how we develop."           

Recent Articles by David Czurak

Editor's Picks

Comments powered by Disqus