Zoning, taxes sparking redevelopment

When land-use planning under the Growth Management Act gets beyond the discussion stage, some property owners are almost assured of being dismayed by the effect.

Of course, there are land owners who are disappointed when they find their plans for future development are stymied by restrictions in the new land-use regulations.

When a principal goal of the GMA is to concentrate development in urban growth areas, there will almost always be a few owners whose property cannot be as intensively developed as they had hoped.

Some land owners within Port Orchard have experienced the opposite effect when land-use regulations permit development of their land which they have little or no desire to accomplish.

The effect of land-use planning on property taxes can push people toward developing their land in a way they had not desired.

Decades ago, this effect on timber and farm lands was noticed when owners found it to be uneconomical to continue the current use while paying taxes based on the “highest and best use” permitted by law.

Agricultural and forest lands tended to become suburban housing or shopping center developments when owners no longer wanted to maintain the current use and pay the higher taxes.

The state constitution and statutes were amended to allow property valuation to be based on the current use when that use was for agriculture, timber, or open space.

A similar pressure on landowners within urban growth areas occurs when land-use regulations authorize uses that make the land more valuable because of market conditions.

Land on which commercial uses are authorized often, if not always, commands a higher price than land on which use is restricted to residential development.

Even when the land is not yet rezoned to bring zoning into agreement with a comprehensive plan there can be an effect on property values, much like plans for a new highway can make nearby property more valuable based on the promise of better access.

When the process is complete, and the land is rezoned to permit commercial development, what has been residential land for many years can be more valuable based on the allowable future uses.

Back in 2008 and 2009, as Port Orchard went through the process of updating its comprehensive plan and then its zoning regulations, some people recognized and spoke up about the effect on property values and taxes.

If values for the affected property rise more than the average because of land-use planning changes, part of the tax burden shifts from those whose property value rose by the average or less to those whose property value rose more.

In theory, taxing districts can collect more tax revenue because of the rise in value caused by land-use regulatory changes.

If the district’s tax rate is already at or near its allowable maximum, valuation increases can make it possible to collect more without exceeding the maximum tax rate.

When Port Orchard’s city council was substantially increasing the city’s levy after annexing into the fire district made it possible, the limiting factor was the maximum tax rate — which meant that assessed valuation increases made it possible to collect more revenue.

This hasn’t been the situation for Port Orchard in the past few years, and even the substantial valuation increases for some property in 2010 didn’t have the effect of increasing the city’s property tax revenue.

But updating the city’s comprehensive plan and zoning ordinances has affected the tax burden of some property owners whose values rose while most others saw values decline.

Change happens, unless stagnation sets in, so land-use plans have to accommodate this change — and perhaps make stagnation less likely.

Anyone wanting to reduce the impact on the few when such changes affect their taxes needs to figure out how to amend the laws.

Valuation based on current use worked pretty well for agricultural, forest, and open space lands, but could it work within a city?

If more intensive development is not encouraged, wouldn’t the city have to expand its boundaries to accommodate growth by developing outlying areas?

Bob Meadows is a Port Orchard resident.

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