Monday, January 23, 2012

How has Oregon's land use planning system affected property values?

Abstract: Oregon's landmark land use planning system has been criticized for imposing large negative effects on landowners’ property values, although evidence to support these claims has been lacking. This paper examines longitudinal data for undeveloped parcels since before adoption of the planning system. The sample includes parcels under different land use regulations, and it compares Oregon to Washington. The results indicate generally that property values have increased at similar rates both inside and outside urban growth boundaries, and across parcels zoned for different uses and across state lines. The results are consistent both with theory and with other studies indicating land use regulations can have positive, neutral or negative effects.
► The effects of land use regulations on property values in Oregon are evaluated.
► “Before-and-after” data covering 35 years are examined in Oregon and Washington.
► Results find property values have risen at similar rates inside and outside urban growth boundaries. ► Results find property values have risen similarly across zoning types and state lines.
Many states in the USA attempt to manage urban growth so that development is directed to urban areas equipped to accommodate development, and rural lands are preserved for resource and other non-urban uses. The state of Oregon is entering its third decade of what many commentators describe as the nation's most aggressive urban growth management programme administered statewide. This article reports a recent evaluation of the effectiveness of the state urban growth management policies as they are implemented by the metropolitan Portland area. The metropolitan Portland area contains the largest population, employment and land base within a single urban growth boundary in the USA. Using primary data collection and analysis, the effectiveness of the urban growth management and resource land preservation effort is assessed. Nearly all regional development has been directed to the urban growth boundary and away from resource lands. Many problems with administration are found, however. Policy implications are suggested.
In Lane County Oregon data show a large difference between real per-acre property values inside and outside the Urban Growth Boundary (UGB). By 2002, this difference was $24,894 per acre. [This implies] that the UGB, by limiting development opportunities, has greatly reduced the value of parcels outside the boundary.  However, this conclusion is not necessarily warranted. While the current average value of land inside the UGB is higher than that outside, the same was true in 1965. The differences in values in 1965 cannot be due to the UGB, as it had not been designated at that time. They likely were due to locational advantages, particularly proximity to the city center. The average distance to the Eugene city center for our sample of parcels outside the UGB is more than twice that for those inside the UGB.
Location relative to the UGB is a relatively coarse filter. High-density residential development is not necessarily permitted on all parcels within the UGB. Thus, we also evaluated the effects of different zoning classes. For the parcels in our sample, the highest density residential zoning category (a maximum of 14 single-family housing units per acre) was low-density residential zoning (R-1). Residential housing development is allowed on parcels zoned rural residential (RR), but at lower densities (in our sample, either 5- or 10-acre minimum lot size). Finally, exclusive farm use (E) and forest lands (F) zoning are very restrictive in terms of housing development.  For example, dwellings may be constructed on EFU land only if they are directly related to the agricultural enterprise.
Land with R-1 zoning has the highest average value in 2002, in large part because of its proximity to the city center. This is followed by land with RR zoning, E zoning, and F zoning. This suggests that zoning restrictions have not greatly reduced property values. Land that eventually was zoned R-1 already had the highest average per-acre value in 1965: $1266 per acre, compared to $389 per acre (RR), $504 per acre (E), and $210 per acre (F). Like parcels located inside the UGB, R-1 land tended to have locational advantages such as proximity to the Eugene city center.

We compared the growth in land values for each zoning designation relative to values prior to implementation of land use regulations. For each subsample, we took the 1965–1972 average value as the base and computed the increase in value in each period relative to that base. The highest rates of  appreciation were realized on land with F zoning. By 2002, the value of this land had grown about 200 percent more than land with the least restrictive zoning (R-1). A high growth rate was also seen on land with RR zoning. The lowest growth rate was on the developable lands (R-1 zoning).
In Jackson County as expected, parcels with the least restrictions on residential housing construction have the highest average values in 2005. However, the growth in average land values over the 1965–2005 period was greatest for parcels with OSR and WR zoning. The average value of parcels with OSR and WR zoning relative to their 1965 value was 1,160 percent and 1,602 percent, respectively.

For RR and EFU parcels, the 2005 value was about 530 percent of the 1965 value. Thus, properties with OSR and WR zoning appreciated more by 2005 than properties with RR and EFU zoning. A similar result was found in Lane County.

by William K. Jaeger 1, Andrew J. Plantinga 1, and Cyrus Grout 2
1. Department of Agricultural and Resource Economics, Oregon State University, United States; 213 Ballard Extension Hall, Corvallis, OR 97331, United States. Tel.: +1 541 737 1419.
2. INRA (French National Institute for Agricultural Research), France
Land Use Policy via Elsevier Science Direct www.ScienceDirect.com
Volume 29, Issue 1, January 2012, Pages 62–72

Also see: http://arec.oregonstate.edu/sites/default/files/faculty/plantinga/jaeger_plantinga_grout_2011_land_use_policy.pdf
Keywords: Land use regulations; Property values; Urban growth boundaries; Land use planning


  1. CSQTown PlannerMay 29, 2012 1:59 AM

    The land use planning is increase the property values for inside and outside the boundaries. And by this system the development of urban and non urban areas are increased. The state of Oregon describe the urban growth management program.
    planning appeals

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