Costs of ranchettes exceed new revenues

Wyoming’s county commissioners tend to approve rural residential developments, despite the fact that ranchette developments invariably cost more in public services than they generate in tax revenues.

By BRODIE FARQUHAR Star-Tribune staff writer

"There’s always the hope that maybe someday it’ll work," said Samuel Western, author of "Pushed off the Mountain, Sold down the River: Wyoming’s Search for its Soul," and a prominent critic of the Wyoming economy.

County commissioners are always hoping that rural residential developments will pay for themselves, he said, even though they never have and really can’t while counties have "bargain basement rates of taxation."

Research conducted by University of Wyoming professors demonstrates that on average and across Wyoming, conversion of 35 acres of agricultural land to a residence creates $1.13 in county government and school expenses for every dollar in revenue generated.

Researchers Roger Coupal, David Taylor and Don MacLeod, of the department of agricultural and applied economics, found a net loss for counties throughout the state. For every $1 in revenue generated by rural residential development, counties saw expenses range from a low of $1.03 in Weston County to a high of $1.45 in Hot Springs County. (Teton County, with its high wealth and income, could not be estimated because it skewed model results, said the researchers.)

Coupal said he and his associates wanted to take a closer look at what happens when rural agricultural lands are converted to residential use. He noted that in 2001, the American Farmland Trust did a national study that compared county expenses to revenues for three general types of land use: agricultural, commercial/industrial, and residential.

The group studied 83 counties and found that residential use cost counties an average of $1.15 in community services for each $1 in revenue created by that use. Yet working lands, such as farm and forest uses, cost only 36 cents for every $1 in revenue, while commercial/industrial land use cost 27 cents for every $1 in revenue.

"The AFT studies included infrastructure costs," said Coupal. "We didn’t want to do that, but we did want to focus on operating costs."

After infrastructure costs are covered — roads, schools and other services — operating costs would give a long-term picture of the costs of rural residential development.

Relying on the 1997 Census of Agriculture, which indicated the average size of an agricultural operation in Wyoming as 3,781 acres, Coupal and company wanted to find out what would happen if this average operation was subdivided into 35-acre lots.

Assuming an average household of 2.59 people and 108 lots, the UW researchers expected 280 new residents. Using a model that predicts total revenues and expenditures, the researchers found a net loss for county governments — a bit less than the American Farmland Trust studies, but still in that ballpark.

Urban development was much closer to a 1:1 ratio for costs and revenues, Coupal said. The UW researchers tried to test the idea that clustered rural development would cost less. There just wasn’t enough data to do so.

"I think the conventional wisdom is that they would save taxpayer dollars," Coupal said.

The UW researchers concluded that county land use and planning policy should encourage ag land protection in order to both capture fiscal savings, as well as public goods associated with non-fragmented lands, such as wildlife habitat, water quality and viewshed.

Carl Mailler, an economic planner with American Farmland Trust, said data developed by his group, UW and other economists can help county officials find a balance between land use decisions. While it is true commercial/industrial land uses generate high tax revenues and place low demands on public services, Mailler said, communities can’t simply focus entirely on commercial/industrial development.

"You get in a cycle," Mailler said, "if you invest solely in commercial/industrial development, after a while, you have new people coming to work in those businesses and they need housing. You can never build your way out of taxes for more services, because people want those services."

Bill Glanz, Washakie county commissioner and president of the Wyoming County Commissioners Association (WCCA), said the UW study "is something we have to work with."

People like to live out in the country, Glanz said. He doesn’t spend too much time worrying about the data, figuring "it all comes out in the wash." County commissioners have talked about the UW study and will again, he said.

In and of itself, said Joe Evans, executive director for the county commissioners association, the UW/American Farmland Trust data doesn’t mean much. "It is a useful tool if you’re developing a comprehensive land-use plan, or trying to decide what to require from developers," he said.

The key points about converting agricultural lands into residential developments are twofold, according to UW and researchers. One is that new expenses almost always exceed new revenues, and therefore cannot be used as a way to balance local budgets. "I think the other point is that agricultural lands act as a sort of fiscal sponge," Mailler said, generating a little surplus while still undeveloped.

Writer Western is skeptical that agriculture can subsidize rural residential development to a meaningful degree. Citing data developed by the Wyoming Taxpayers Association, Western noted that ag lands generate only 1.3 percent of the state’s property taxes. According to the association, residential property brings in 18.9 percent of property taxes, locally-assessed industries generate 7.4 percent, state-assessed industries generate 6.4 percent, commercial properties generate 5.7 percent, and mineral production generates 60.3 percent of Wyoming’s property taxes.

http://www.casperstartribune.net/articles/2003/05/12/news/wyoming/98b5114decd00e4efb251894c0a41b0b.txt