Agricultural Zoning and Urban Sustainability

(A version of the following appeared in The Fort Collins Coloradoan, co-authored with Kyle Cascioli and Ron Throupe, April 9, 2011)

It is sometimes said that the last crop to come out of dedicated farmland is a subdivision.  The Denver Post recently ran a two-part exposé on how tax breaks intended to help struggling farmers in Front Range counties, including Larimer County, are benefiting not those who make a living by growing wheat or grazing cattle, but rather those in the business of building houses and strip malls.

Agricultural lands are taxed at one of the lowest rates (mil levies) available. This rate is significantly below the ad valorem tax rate associated with unimproved property that’s zoned as “vacant land.”  Often owned by family operators or their descendants, undeveloped lands are typically dedicated to continuing agricultural use.  The Post story detailed how vagueness in state laws governing agricultural zoning have been exploited by real estate investors and land speculators to acquire and hold vacant lands for future commercial development.  Such “land banking” may artificially subsidize developers and land speculators while reducing the amount of land available for agricultural use.

Several questions arise from this situation.  One is whether investors and developers who acquire agricultural properties via land banking strategies—and who do not maintain those properties as productive agricultural lands—should benefit from reduced property tax rates that, technically, are being subsidized by other property taxpayers.  Another, more compelling question for us is whether the state’s policy accelerates urban sprawl, reduces the quality of Front Range life, and compromises the long-term sustainability of our towns and cities.

We believe that it does.  How so?

Once an agricultural property is no longer maintained its fertility is reduced.  Agricultural lands must be maintained to be productive, and many investors and developers do not maintain these newly acquired farmlands in the same manner as when they were dedicated farms.  Additionally, water rights are often stripped from the land and sold as a separate property interest to the highest bidder.  If the land is not maintained, it will be both difficult and expensive to return it to productive agricultural use.   The consequences of non-maintenance can be devastating, as evidenced by the continuing real estate bust in Florida.   In October 2010 The Wall Street Journal reported that nearly 140,000 acres of citrus groves across Florida have gone to waste as a result of failed land banking strategies.  The unmaintained land has become a breeding ground for a type of citrus lice responsible for a plague that is

wasting millions of acres of crops in the Southeast.   Whether Colorado is susceptible to such an ecological and economic catastrophe as a result of land banking is an open question.  But there are certainly other sustainability implications.  As increasing amounts of agricultural land on the metropolitan periphery are taken out of production more farm produce and other food stock must be imported from more distant locations to supply Front Range cities.  With oil prices rising and continued political unrest in the Middle East it is likely that the cost to import produce and food stock from further distances to urban areas may also rise.  This could inflate metropolitan food prices, which are on the rise, and result in greater economic hardship for our most vulnerable urban populations.

The economic and cultural sustainability of cities is intimately connected to the availability and productivity of agricultural land.  Colorado’s agricultural zoning laws should only apply to actively maintained agricultural lands.  It should not provide incentives for those who would take agricultural land out of production to inventory for future development.  If the state were to create clear policy and guidelines for counties regarding the equitable application of these zoning requirements, we believe less land would be taken out of production prematurely and more would be properly maintained until such time as the seeds of that last crop – the subdivision – are sowed.