Community Development
The following document was written by Ron Seibold, President of the WCEF, to the County Commissioners and Planning Commission of Jefferson County, Kansas. Submitted in January, 1999.
Planned Unit Development as an Integral Part of the New Comprehensive Land Use Plan
Introduction
I submit this document on behalf of the Wilderness Community Education Foundation and other landowners in Jefferson County. The purpose of this material is to urge Jefferson County Officials to limit scenic areas in Jefferson County to Planned Unit Development (PUD) rather than spot development. This document will show why it is in the best interests of the County to make sure the new Comprehensive Plan requires Planned Unit Development in scenic areas.
I hope every County Official will come to understand that scenic areas are valuable not only for their intrinsic unspoiled natural beauty but also for their potentially high material value as a tax base. I also hope that Officials will understand that allowing spot development, landfills and highway right-of-ways in these areas significantly lowers both the intrinsic value and the potential tax value of these assets.
I use an analogy of comparing the scenic areas in our County to an expensive painting. It is the overall beauty of the painting that gives it value. Cutting the painting into pieces eliminates most of its value. To allow one person to cut a section out of it and do with it what he pleases equally destroys its value.
Under a Planned Unit Development, each land owner (regardless of the ultimate use of his land) can receive $10,000 or more per acre from the PUD given current economic conditions. To allow one land owner through Spot Development to spoil the possibility for other land owners to realize this kind of return on their investment is wrong. Allowing scenic areas to be devalued through spot development, landfills and highway right-of-ways costs millions in potential tax revenue. It also severely limits the potential return for other land owners in the area.
I am a native Kansan. I grew up on a farm in a nearby county but have loved the beauty of Jefferson County all my life. Except for the last few years, my income has been well below average. Given my background of poverty, it is curious that I now find myself supporting a plan to attract high-income families to our County, but that is exactly what I propose.
Jefferson County needs to attract all economic groups, but unspoiled scenic areas of our County are particularly attractive to families who build homes with high tax valuations. It would be a shame to not take advantage of them.
According to the 1990 Census, Jefferson County has a much lower percentage of families with $150,000 or more incomes than nearby counties. Johnson County’s percentage of high income families is 137 times higher than our County. Shawnee’s percentage is 19 times higher. Douglas County’s percentage is 14 times higher. Even counties not directly in the Kansas City-Topeka corridor have a higher percentage. Leavenworth is 3 times higher, and Atchison is twice as high.
With our location, County Officials should not miss the opportunity to increase our tax base. Once we lose a scenic area to spot development, landfills and highway right-of-ways, we lose it forever. Using PUDs creates a much larger tax valuation. A larger tax valuation is a benefit to all our citizens regardless of their economic position.
Some County Officials claim that high-income people use more services than middle-income people. I submit that a family paying $10,000 per year in property tax requires little more in service than one paying $1,000 per year. If a high income family lives on a bluff over looking a scenic valley, they require less service than a low income family living in a city.
For one thing, most people in rural areas of Jefferson County get their water from self-supporting cooperatives. They take care of their own waste and do not need sewers. Further, a PUD must pay for all construction and all maintenance of the private roads within its boundaries. Beyond any doubt, high income rural homeowners are a benefit to the bottom line of our County’s tax system.
In addition to producing much less tax revenue per person, spot development puts a greater burden on the County government for construction, improvement and maintenance of roads. A Planned Unit Development produces very little burden. Besides paying for its own water, sewer, roads and even security, a PUD can result in fewer people living on the land, which means less pressure to improve existing roads, schools and other amenities.
Development Scenarios Please click on the thumbnails below for full size maps. |
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The examples above are not proposals. The PUD example is only one of infinite design combinations. The common thread for PUD regulations in the new Comprehensive Plan should be that the PUD preserves farmland and wildlife habitat, especially in areas that have a common view. PUD regulations should require a large percentage of the land be commonly owned through a PUD Association with development rights granted to a Land Trust.
Likewise, the example of spot development is one of thousands of possibilities. The common thread for spot development is parceling off valuable scenic areas, farmland and wildlife habitat. The other common thread is much less tax revenue with more population needing services. Non-cohesive spot development ends up destroying the attractive nature of the area and provided as little as 10% of the property tax valuation.
It is the shared ownership of never-to-be-developed scenic views that attracts those willing to pay a high price for a building site. It is the reason they will build expensive homes with high tax valuations. If we destroy scenic views through spot development, highways, industrial areas or landfills, the value of the area drops to a fraction of its potential value.
Spot development might satisfy the immediate financial concerns of one constituent, but it cuts the value of the land for neighboring constituents by more than half the potential value. It also cuts 50% or more from the potential value for the constituent wanting to go his own way without regard for his neighbors.
The Economics
The examples above show both a PUD and spot development for the same 600 acres. For both examples, the projected number of homes and tax valuation is based on the area being totally developed. In real life, neither a PUD nor spot development would be completely developed for many years, if ever. Often lots or building sites in a development remain unpurchased for decades. For the purpose of estimation and comparison, I will use the maximum possible return and then reduce it by 50% to get an idea of where things might be in twenty years or so.
The spot development example shows a full development of 55 new homes in the 600 acre area. Spot development leads to the view changing from "looking across a broad unspoiled natural vistas" to "looking at other people’s houses." Spot development is not attractive to people looking to build a million dollar home on a premium building site.
Certainly, there may be a few homes in a spot development valued at $200,000 or more, but most will be in the $50,000 to $100,000 range. Looking at current spot development areas in the County, we can reasonably expect an average of $100,000 per home in this example.
By contrast, the PUD will attract those who are willing to pay premium prices for building sites and who plan to build expensive homes. In the example shown for this 600-acre area of Buck Creek, no home looks into another home. All homes have unobstructed views of primitive wildlife habitat and undeveloped farm land. Further, since the development rights to these common areas are sold to a Land Trust, the unobstructed views will always be there.
In this example, not a single new home is accessed from the narrow Buck Creek Road. The county would have no need to improve it. In fact, it could even be made into a non-vehicle trail through the commonly owned farmland and wilderness areas and/or a private drive to the existing homes on the valley floor.
All access to homes in the PUD example are via existing, well-maintained, straight county roads. Since only one entrance to the public road leads to many homes, the road is safer than with spot development and individual driveways. Further, since fewer total homes exist in the PUD example, the population is nearly half that of spot development, thus road improvements and increased county services are not as urgent.
Our society still has some upper class people who like playing golf every day and who like being in the heart of a city. This is changing. An increasingly large number of upper income professionals today seek the solitude and quiet of country life. They do not want to look at a golf course or other people’s homes. They want to have a beautiful view of a beautiful valley that is still in its natural state.
Further, we are now deep into the Information Age. It is no longer so important for an executive or professional to travel each day to an office. Most can work primarily in their home. Enjoying the peace, quiet and serenity of a scenic rural area is very attractive. If we can guarantee never-to-be-developed scenic views, many high-income families will pay a premium price for building sites on which they will build expensive homes. In this example, the county receives ten times more property tax with about half the population or about 20 times more property tax per person!
The PUD map shows how a PUD can provide ten times more tax revenue per acre with much less population to service. Any concerns about lower sales tax due to the lower population is more than offset by the fact that upper income families spend many times more than middle income families. Encouraging more upper income people to move to our County will actually provide more sales tax revenue in addition to a windfall in property tax revenue.
More specifically, the property tax valuation for a fully developed 600-acre PUD example is $52.5 million. For the same 600-acre area developed through spot development, the valuation is $5.5 million or about 1/10 the potential.
We estimate that approximately 200,000 acres of Jefferson County is just as scenic and just as unspoiled as the Buck Creek area. Thus, there are 333 (200,000/600) areas like the one in these examples. Multiplying the property tax valuation in each of the two examples by 333, the difference in new property tax valuation is $1.8 billion for spot development versus $17.5 billion for PUD’s.
Of course, as mentioned before, full development by either method will take decades. If we assume that these scenic 200,000 acres are 50% developed by the year 2020, the difference would be about one billion in tax valuation for spot development versus about $10 billion for PUD’s. This would turn the tables. Compared to nearby counties, Jefferson County would find itself with a higher rather than a lower percentage of upper income families. We would see upper income people migrate away from nearby counties, seeking a quiet country home/office overlooking a scenic vista in Jefferson County.
The economic advantage to Jefferson County is more than the ten times greater property tax with fewer people to serve. The development cost to the County for the PUD example is a fraction of the cost for the spot development example. By requiring PUDs in scenic areas, the County can significantly lower taxes AND provide much more in funding for schools, police, fire protection, parks and other services for everyone in our County, rich or poor.
Starting a PUD
All that is necessary to start a PUD is for someone to initiate it. This person could be a land owner in the proposed PUD or an outside "developer." The next step is to persuade all the land owners in the area to be a part of the PUD.
This is easier than it appears. Let’s consider three types of land owners: Those who want to make money. Those who want to preserve and protect the land. Those who have no interest in selling.
The easiest person to convince is the person who wants to make money on his land. The revenue per acre for a PUD can be more than twice the revenue of spot development.
The person who wants to preserve and protect the land can have the best of both worlds. Not only will the development rights for most of the land go to a Land Trust, the landowner can receive $10,000 or more per acre for simply participating. Nothing would change. The land owner can still enjoy the land and has full access to the wilderness.
The person who has no interest in selling is often the same person who wants to preserve and protect the land. If the land owner currently lives in the area, nothing would change except receiving $600 to $1,000 or more per acre per year as return on the money invested from the PUD. Any existing homes or buildings could remain. Most existing home owners will want to put all but a few acres around their homes into the PUD in order to take advantage of the windfall.
Certainly, in every case, the developer needs to seek a consensus from all the land owners. The PUD needs to be something that everyone likes. Reaching consensus when so much profit is available is easy compared to the contentious battles we have seen in our County over spot development. With spot development, landowners fight one another. With PUD’s landowners work cooperatively with one another.
Like spot development, PUDs require some up-front costs, such as planning and surveys. If initial agreements with the land owners are secure, most developers can easily pay these expenses or borrow the funds. Once the PUD starts selling building sites, the proceeds will pay the costs of the private roads, which is the major development cost.
As the PUD sells more building sites, the proceeds become surplus. The PUD pays the surplus funds on a per-acre basis to each landowner involved.
Selling the Building Sites
Finding buyers for building sites in a PUD or for lots in a spot development involve similar market dynamics. Presently, there are few areas in Eastern Kansas that can guarantee a permanent scenic view. Further, most of the scenic wilderness in Jefferson County is only a half hour drive to either Topeka or Kansas City.
For the time being, a stronger market exists for prime building sites for upper income families than for middle income families. Jefferson County needs more upper income families to improve its tax base. What we have is a win-win situation for both those wanting a place for a luxury home and for Jefferson County. Our County needs to increase its high-income population to ease the tax burden on the lower and middle classes.
We can compare a land owner who spot develops his land to an investor buying stock in one single company. The investment could be successful and show quick results or it could be a losing proposition or take many years to realize any gain.
When a land owner participates with other land owners in a PUD, it is more like a mutual fund. Rather than being isolated to one single asset, the PUD spreads out the risks and revenue. However, PUDs are not like mutual funds in terms of return. A mutual fund’s value is the total of all stocks involved. A PUD’s value is about twice the value of spot development.
In neighboring states the cost of land in checkerboard Spot Developments of 5 to 10 acre parcels is about $4,000 per acre or about the same as here. However, if a building site can provide a never-to-be-developed scenic area (such as a National Park or Forest), the value is not the actual acreage but the intrinsic value of the parcel itself.
Building locations with good views in Colorado can cost as much as $1,000,000 for only a few acres of land if the building site offers a good view and borders public land. Even one acre building sites in crowded communities in Colorado demand $250,000 or more if the view is good.
Building sites in a PUD could fetch as much as $500,000. For the purpose of the attached example, I figured the average building site at $200,000. This means the 35 building sites in the example would yield $7 million. Budgeting a generous $1 million for road construction and other development costs, each land owner ultimately receives $10,000 per acre, regardless of the land’s use in the PUD.
Even though a family actually owns only three acres in this PUD example, each owns 480 of entrusted common acres. In a sense each family owns 483 acres. At $200,000 for a building site, the 483 acres cost about $400 per acre! Often referred to as "smart growth," large areas of common ownership in planned communities are gaining in popularity throughout the United States.
Even if we look at it as 35 home owners jointly purchasing 600 acres, each homeowner owns an average of 17 acres, so that the actual land cost is between $10,000 and $12,000 per acre. Considering the long-term value, a well-planned area such as this will show value appreciation much greater than spot development because spot development destroys much of the intrinsic natural beauty of the area.
Overcoming the Opposition is Worth the Result
Using PUD’s to attract high income families from Topeka, Kansas City and Lawrence will give Jefferson County taxes that would otherwise go to Shawnee, Leavenworth, Douglas and Johnson Counties. Certainly, there will be intense resistance to this idea from Commissioners in these neighboring counties and increased lobbying to impose their ideas of keeping Jefferson County poor.
Obviously, they would rather see Jefferson County as a location for rapid transit highways and garbage dumps than as a place for their wealthy citizens to relocate. As long as they can turn our wilderness areas into highways and landfills, there will be no reason for people to move here.
I hope our county officials resist allowing our County to be used as place to deposit garbage and to get across as quickly as possible. If so, we can preserve our County as a beautiful place where one can live in harmony with nature.
We all know about the intense lobbying going on from the adjoining counties. We can anticipate even greater lobbying if our County Officials seriously consider limiting valuable scenic areas to PUDs that attract high income families. It will be difficult for our Officials to resist these pressures from our neighbors. Yet, if we stay the course and limit our scenic areas to Planned Unit Development rather than spot development, garbage dumps and highways, we can have a secure future as a prosperous County.