(My deepest apologies for the length of this post [and the title, jeez]. At 2000 words, it’s obscenely long. But I think it's well worth a read.)
Money doesn’t grow on trees, but in Howard County, it might as well. An open patch of dirt with the right kind of zoning overlaid creates ideal conditions for crops that are just as valuable, though not as sustainable, as money trees: houses.
Of course, this is already well known. Developing Howard’s fertile hills and fields has long been a profitable enterprise, and with accelerating growth in property values, the incentives facing holders of developable acreage to sell out become harder and harder to resist, despite the work of various preservation programs and the good intentions of many property owners.
While not new, the story of Howard’s dwindling farmland took an interesting turn recently when Sun reporter Larry Carson wrote a detailed piece on Doughoregan, a 1,400-acre estate in western Ellicott City owned by decedents of Charles Carroll of Carrollton, a signer of the Declaration of Independence (more background on the story here and here). It seems upkeep costs (and incentives to develop) are the irresistible forces confronting the family, who, since the summer, have been talking to the county about ways to ensure the historic character of the land is preserved (and they get some cash).
This story isn’t new, however. Preserving 300 year old buildings costs money, while building houses on parts of the large property makes money. Easy as that. And, given the fact that 892 acres of the property are to be relieved of the development restrictions imposed by a 30-year easement with the Maryland Historic Trust, building houses never seemed so right.
But it’s not quite that easy, as described in a statewide editorial in the Sun yesterday (I was pointed to the editorial by an alert reader to whom I offer much thanks).
The Carrolls reportedly want to preserve 600 of the 892 acres by selling the development rights to the county for up to $24 million (or $40,000 an acre, twice the county's ceiling). Then they want to sell 200 acres for 350 houses served by new county utility lines to the rural area (and potentially providing them far more than $100 million).
The family maintains that this is the only way it can afford to preserve a large part of the estate, the 20-room manor house that dates back to 1720, and, not least, its ownership of the property. The alternative, under current zoning, is that the Carrolls could develop even more houses, 450, on one-acre lots across the 892 acres. This would be an even worse outcome for the county, but it could yield the family hundreds of millions of dollars.
The Sun gets it right—neither outcome is very desirable. But what’s desirable for the county and what’s desirable for landowners like the Carrolls are usually two different things altogether. To be sure, the land’s value is not purely financial; it has historic, environmental, and other hard-to-quantify—but no less important—values that would presumably provide justification for the county to use some of our collective resources (tax dollars) to have the property preserved. However, the county’s willingness to pay—rather, our collective willingness to pay—rarely matches the landowners’ actual or desired price for the property. Therein lies our problem.
Development rights for a large portion of the 892 acres should be purchased by the county for preservation, as the Carrolls propose. But instead of allowing houses on the remainder, that land also should be bought by the county to catch up with its desperate need for parks and future school sites. Howard couldn't afford this without plenty of aid from state and federal sources and perhaps national preservation groups. It also couldn't happen unless the Carrolls give up an unpalatable aspect of their proposal, the lack of any provision for public use of any part of their land.
The Sun’s proposal doesn’t address the problem I present: that the county, even with federal and state support, may not be willing or able to purchase this land at the fair market price. This was the dilemma faced last fall by a committee charged with finding ways to fix the county’s agricultural preservation program. The committee
fell apart and nothing came of their work, but their mission, like the preservation program, was doomed to fail. Pitting the paltry and thinly spread resources of local governments against the financial single-mindedness of developers is a completely unfair fight. Accordingly, landowners cash in on the development cow—as they would/should.
But, if we allow other owners of large, undeveloped parcels of land to get fair market price for their property, how can we justify giving less to the Carrolls when their only sin is having a large patch of dirt that we value highly but won’t pay full price for?
Don’t get me wrong. I don’t want to see any houses built on this property. Indeed, my ideal outcome is having all their land permanently preserved and making some of it accessible for to the public (it is, after all, a great piece of history that almost no one in Howard County knew about until recently). That said, the Carrolls shouldn’t be allowed to play by different rules.
But what to do? Well, this was all just a roundabout way of getting to something that I brought up in my
Charrette Opposition Taxonomy a few days ago. One of the major problems many critics of the Charrette have with the proposed plan is that, by allowing up to 5,000 residential units on properties that would otherwise not be available for such profitable development, we’re basically just giving money away. And in this respect, I think the Charrette opposition has it right.
Without a change in the zoning, which won’t happen unless approved as part of the Town Center master plan process, less than 1,000 residential will be available for downtown construction. Clearly, I don’t support such a small number, as it would not bring about the necessary density to support many of the amenities—walkability, plazas, cultural offerings, restaurants—that we want, need, and deserve to have included in our new and improved Town Center. But receiving such amenities (which have always been promised) doesn’t mean we should give away the right to residential development, a right that we know carries with it tremendous value, especially in the heart of the
Greatest City in America (sorry,
Baltimore).
But what if we didn’t give General Growth and other Town Center property owners the right to develop housing? What if we made them buy it?
By this I don’t mean they should buy development rights from the county. Despite what it or others may think, the county has no right to develop residential properties. That right is conveyed (by the county, incidentally) only to owners of qualifying lands—namely, those with the right kind of zoning, people like the Carrolls. Moreover, purchasing the right to develop residential units in Town Center or elsewhere should not exempt anyone from paying for the impact of that development; indeed, as I hope to address soon, residential development in Town Center will strain existing resources and should ultimately pay for itself, either through existing or expanded taxation—that’s known as paying the full social cost of something. And it’s only fair.
The situation we are presented with is ideal for what’s known as
Transfers of Development Rights (TDRs), a topic I touched upon in previous posts about preserving our remaining farmland and open spaces. There are currently many landowners in the rural west—where development is entirely inappropriate—possessing the right to build houses on their properties. In places where development is appropriate, like Town Center, there property owners lacking the right build residences. Seems to me like we’ve got a bunch of buyers and sellers, the makings of a market.
TDRs have been used in several jurisdictions around the country to keep development in its place. Under the right conditions, which we likely have now, these programs are highly successful. Montgomery County—and I know we’re not and don’t want to be our neighbors to the west, but bear with me—has preserved over 40,000 acres of farmland using only TDRs (and not public money).
In the past such programs would not have been successful, however. Until rather recently, we’ve had a large supply of land in areas appropriate for development—residential and otherwise—and attractive to developers, like Columbia and Ellicott City. It wasn’t until available land (and residential unit allocations and density) began drying up in the east that development really charged into the west. Yet, while the east is still the most appropriate location for development and likely still attractive to developers, we’re sacrificing our integrity, resources, and open spaces in a vain attempt to “control” the inevitable growth of our community. The fear of density, of putting growth where it belongs, is crippling our community.
By treating development rights like a limited supply of stocks, allowing them to be bought and sold based on the needs of the interested parties (with some governmental oversight, naturally), the right incentives are built in. Landowners know they’ll get a fair price, and can hold out selling until they think the market’s right. Developers get predictability by knowing they can tap into a pool of units when they need it. But neither gets a free ride. Landowners would loose the right to build on their property, giving us far more land in preservation than we could ever hope for out of tax dollars. Moreover, developers aren’t given unfettered access to the wealth of this community—wealth that is indeed amassed by the citizens of this community, our one true asset.
Of course, developers will surely trot out the argument that such a program would increase costs, endangering not only their profits (incentives to develop) but also the likelihood of affordable housing. Such arguments are, of course, petty. Additional costs would be spread over a dense, urban development, and on a per unit basis, could be as little as a few thousand (For example, the Carrolls are asking the county to buy their development rights at $40,000 per acre. If General Growth buys that acre instead, they could potentially use it to build 10 units—totally hypothetical—making it $4,000 per unit. Without question, an insignificant sum.)
Designed the right way, the solution really could be win-win-win.
However, there are a lot of details that must be worked out before a program like this could even be considered, including which landowners would qualify to participate; what is the right ratio of development density between various locations in the county; how transactions would take place; to what degree the county would be involved; and many more. None of these issues are unsolvable, and there are a host of similar programs that could help guide development of ours.
Our talk about such unique and effective programs has unfortunately been limited or nonexistent. The only mentions I’ve heard of development rights transfers was in a
previous post of mine (I know, it's all about me)
and in the final sentence from an e-mailer (perhaps the same person who e-mailed me) in Howard County Blog #1’s
post about this topic last night.
With all of the work involved, we’re already running low on time if we want to have such a program in place before Doughoregan’s easement expires (May 2007) and the Charrette is approved (who knows).
Maybe it’s too idealistic. Maybe I’ve been filled with too many free market hearsays to objectively judge the merits of such an approach. I can’t say for sure, but if we don’t at least start discussing something like this, we will lose a great opportunity to enact a meaningful, cost-effective and efficient approach to one of the most intractable problems facing our community.
And with that, I’ll leave it to you. Discuss.
