Why Measure 37 doesn’t make sense

I realize that many Oregonians don’t want to be bothered with the details of why sound land use planning benefits everybody, and why Measure 37 is a disaster. I’ll keep things simple. Let’s talk lemonade stands.

It’s a hot summer. Every kid on the block gets the bright idea, “I’ll set up a lemonade stand on our lawn next to the sidewalk.” They all go to their parents for permission. The block is full of naysayers. “No way, kid. Find something else to do.”

Except for one accommodating couple: “Sure, honey. It’s fine with us if you sell lemonade.” The child starts her business. She does great.

Because she’s got the only lemonade stand on the block. All of the strict parents made it possible for the kid with permissive parents to make money. If there was a lemonade stand in front of every house, the limited number of cold drink buyers would be spread out among many competing sellers.

This isn’t rocket science. It’s basic economics. Which is why Oregon’s Measure 37 is founded on illogic. This law says that owners must be compensated when land use laws reduce the value of their property. Or, the laws have to be waived.

The big flaw in this logic is that the very land use laws that prevent people from using their property as they want to—putting ten houses on a five acre parcel instead of one house, for example—is the reason why their property is so valuable if those laws are waived.

Measure 37 proponents like to spout platitudes such as, “When a government regulation reduces the value of your property, you should be compensated.” What isn’t said, but should be, is: “That same government regulation also is responsible for increasing the value of properties.”

My wife and I live about five miles south of the Salem urban growth boundary. Between us and the Salem city limits is mostly farmland and homes on AR (acreage residential) parcels that aren’t suitable for farming.

Nearby, a Measure 37 claim has been filed on a 215 acre parcel that currently is zoned EFU (exclusive farm use). As noted in “Measure 37 hits close to our home,” the owners want to put 80 homes on the land. They believe that the land is worth $18 million with AR zoning compared to $650,000 with EFU zoning.

So they either want Marion County to give them $17 million and change, or waive the land use laws that are preventing them from selling 80 lots. Now, $18 million divided by 80 is $225,000. That’s pretty steep for a two or three acre rural lot, but is fairly close to the market price—especially considering that many of the lots in this proposed development would have nice views.

I can guarantee, though, that if Oregon didn’t have urban growth boundaries and other land use laws, small acreages would be selling for much less money because this state would have rural developments sprouting up all over. When I drive to Salem I’d be passing southern California-like sprawl instead of vineyards and Christmas tree farms.

Oregon’s land use laws limit the supply of rural acreages zoned for housing, so this increases the price per acre. Thus the only reason this Measure 37 claimant may make as much money as he thinks he will is because the laws he wants waived have produced the land value that he wants to reap.

In other words, most Measure 37 claims are parasitic. They’re sucking up benefits produced by the very land use laws property rights advocates hate so much. And in the process they’re reducing the value of neighboring properties. People in our area thought they could trust that EFU acreages would remain farmland.

With Measure 37, surprise! You can wake up one day, hear the sound of fir trees being felled, and find that your rural home is about to be surrounded by a subdivision.

I have sympathy for landowners who expected to be able to build a house on their property and then were stymied by a land use law. If all Measure 37 did was allow a residence to be built on a lot, even one zoned EFU, I’d have no problem with that. Nor would 1000 Friends of Oregon.

But most Measure 37 claims are by people who are trying to make money off of the land they own, not live on it. Like other financial investments, land speculation is risky. Markets change. Laws change. Economies change. Why should an investment in land be risk-free, which is what Measure 37 intends?

Back in the 80s my wife and I owned some limited partnerships. They were hot stuff in those days, because federal laws allowed investors to take losses and reduce their taxable income. Until the tax laws changed. Then our limited partnerships were much less valuable.

I don’t recall anyone claiming that the government should either reimburse them for the loss of value in partnerships they owned that was caused by a change in the laws, or give them a waiver from those laws. Yet this is just what Measure 37 does for land owners. It’s ridiculous.

In the upcoming primary and general elections, only vote for Oregon candidates who promise they’ll fix the flaws in Measure 37. This state is still livable, but the longer Measure 37 stays in effect, the less it will be.

Comments

[Corvallist]

Bravo! What a ridiculous law. Most of these landowners also claim to prefer Oregon's scenic beauty over California sprawl, but are blinded by the dollar signs in their eyes.

[elves]

Yep, the M37 claims are based on an artificial monopolist's windfall that was never anticipated by the property owners when they acquired their property. Proper M37 "damage" measurement should be based on the assumption that no other properties have restrictions either. The problem is, even if your neighbor's claim was cut by 95%, due to M5, M50, etc., there's no money to pay even modest claims. That's why every M37 claim results in waiver of the regulations. Welcome to modern Oregon - all major political decisions are by reactionary mob rule driven by special interest-funded tv sound bytes (but don't get me started).

[phastphill]

I agree with everything you say, but try and put it in 3 line sound bite. 64% of Oregonians believe land use planning is a good thing, however the proponents of Measure 37 were able to frame it as a fairness issue.
The conservative spinmeisters are great at selling individualism over the shared valuses of the "Commons".

[Rain]

Where I don't understand the fairness of the ones who want to subdivide their farms for big profits is that for years farmland has benefitted from cheaper taxes and still does. Will the subdividers now have to pay all that difference back to the state? No talk of that but wouldn't that be fair? If they had to, some might think twice on their profiting at the expense of everyone else.

[torridjoe]

Nice piece! I covered it and other M37 subtopics this afternoon at Loaded Orygun:
http://loadedorygun.blogspot.com/2006/03/meas-37-strangling-golden-goose-that.html

Carry on!