The Oregonian passed along a new argument against Measure 37 in an editorial piece today. In brief, the Whimperer (citing a study by the American Land Institute, see below) says that farmers and foresters have already been compensated, through special property tax assessments, for living under the restrictions of Oregon's land use laws. Let's take a look at that.
The editorial describes as a "myth" the idea that farmers and foresters were never compensated for being made subject to the statewide land use restrictions; in fact (says the editorial, citing the ALI study) rural landowners "reaped $4.9 billion in property tax reductions" over the 30 years from 1974 to 2004. They're being disingenuous.
The editorial correctly states that when Oregon adopted the statewide land use planning bill in 1971, Senate Bill 100, it adopted a companion bill, Senate Bill 101, to give a property tax break to owners of farm and forest land. But the editorial doesn't describe the tax break. You could read the article (as I did) and go away thinking that in 1971 the legislature cut property taxes for farmers and foresters to make up for restricting what they could do with their land.
That's not exactly right.
The "property tax break" is a special assessment program, part of state law but administered by the county tax assessors. It says (and I'm simplifying the details a bit) that the owner of farm or forest land outside an urban growth boundary may elect to have it taxed based on its value as farmland or forest land, instead of on its value for its highest and best use. So if you own 100 acres of farmland outside the UGB that has development potential, and you're farming it, you can pay taxes on it based on its value as farmland, instead of on its value as homesites. Let's say that in your area farmland is worth $5,000/acre and five-acre homesites are worth $200,000. You could elect to have your land assessed as farmland (a value of $500,000) instead of as building sites ($4,000,000), knocking 7/8 off of your property tax bill.
Here are the two points the Oregonian missed when it blindly copied the analysis of ALI. First, the special assessment program assumes that you can do something with your land besides farm it. If all you can do with your land is to farm it because land use laws prevent you from building anything, then you don't get any benefit from the special assessment program -- the highest and best legal use of your property is farmland, so it's assessed at $500,000 with or without the special assessment program.
Put another way, SB 101 and the special assessment program didn't compensate people who had their development potential taken away; rather, it offered an incentive to people who could develop not to do so. Measure 37 provides compensation to people who lost their development rights under SB 100 and who didn't benefit from SB 101.
Second, if you sign up for the special assessment program and some years later you take your property out of special assessment, you have to repay the last 5 or 10 years of property tax savings. (Whether it's 5 years' worth or 10 years' worth depends on whether you're inside the UGB.) It's a loan, not a gift.
Incidentally, the Oregonian said nothing about the American Land Institute, not even where it's based or who runs it, except to say that it is a non-profit organization. Is it an academic think tank from a national city? Not exactly. In fact, it is based here in Portland, Oregon, and its key personnel are Henry Richmond (long active in 1000 Friends of Oregon) and Bowen Blair (the first director of the Friends of the Columbia River Gorge). It was first formed in 1995, dissolved in 1997 (apparently for not filing its annual report with the state), and then re-formed in 2003. (It filed tax returns throughout this period, and the organizers may not have known that it ceased to exist.) Why didn't the editors give a little background about the American Land Institute? Because they didn't know, or because they did?
[Update: Amanda Fritz has a more positive view of the editorial, which you can read here.]
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