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How have land-use regulations affected property values in Oregon? Public Deposited

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  • "This study examines the ways in which land-use regulations in general and Oregon's land-use planning system in particular may affect property values. The study is focused on Oregon, but it is framed within the broader context of research in economics. Our analysis of Oregon land value data finds no evidence of a generalized reduction in value caused by Oregon's land-use regulations, a result that is consistent with economic theory and with other research in the economics field. Economists recognize three potential effects of land-use regulations on land values: restriction effects, amenity effects, and scarcity effects. The first effect likely will be negative for restricted properties, but in many cases amenity and/or scarcity effects have a positive and potentially offsetting effect. As a result, and despite the widespread belief that most land-use regulations have negative effects on property values, the opposite may be true in many cases. We collected data on samples of parcels indicating the levels and trends of land values in parts of Oregon over the past 40 years--beginning before Oregon's land-use planning system was in place. By comparing land value patterns for regulated lands with those for unregulated lands, and by comparing patterns in Oregon with patterns for similar areas in Washington State (where land-use planning has only recently been enforced), we scrutinized the ways in which Oregon's land-use planning system has affected property values. The analysis was based on land value data for a sample of parcels in five counties, three in Oregon (Lane, Jackson, and Baker) and two in Washington (Lewis and Kittitas). The data are for intervals between the mid-1960s or early 1970s (before the implementation of Oregon's land-use planning system) until the early 2000s. The results of this analysis indicate that: [1] Land values (adjusted for inflation) have generally risen since the introduction of Oregon's land-use planning system in 1973, both for rural lands zoned for farm and forest use and for developable lands both inside and outside of urban growth boundaries (UGBs). [2] Since 1973, when Oregon's land-use planning system was adopted, the rate of change in land values in Oregon has been about the same as for similar lands in Washington. [3] The data indicate that over the past 40 years, lands with the most stringent development limits (e.g., those with exclusive farm or forest use zoning) have increased in value at about the same rate as lands without such restrictions. [4] The value of lands outside the Eugene urban growth boundary in Lane County, Oregon grew slightly faster than properties inside the UGB. [5] Finally, there is no evidence of slower rates of increase overall for the Oregon lands studied compared to lands in the Washington counties studied. The data presented here do not, therefore, support the belief that Oregon's land-use system has systematically reduced the value of restricted properties. The results are consistent, however, with the design of Oregon's land-use planning system and with economic principles. Oregon's land-use planning system is not intended to limit the amount of development that occurs, but rather it is intended to influence the location of development in ways that are consistent with various land-use planning goals. Among those goals is an interest in concentrating the location of development within urban growth boundaries rather than allowing dispersed and fragmented developments. Sprawl or scattered development can raise costs for public services and infrastructure and produce adverse effects when incompatible land uses (e.g., farming and residential) are mixed. In addition, our analysis finds that government programs such as Oregon's special tax assessments for farmlands are likely to be "capitalized" into land prices, raising them by as much as 14 percent on average. These findings are consistent with results from other economic studies. Studies from many other parts of the country, and some within Oregon, have found evidence of positive, negative, and neutral effects from land-use regulations, reflecting the fact that there are often substantial positive amenity and scarcity effects that can offset some or all of the negative restriction effects associated with land-use regulations."--Exec. Sum.
  • Published June 2007. Reviewed January 2015. Facts and recommendations in this publication may no longer be valid. Please look for up-to-date information in the OSU Extension Catalog:
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  • Executive Summary -- I. Introduction -- A. Potential effects of land-use regulations -- Restriction effects -- Amenity effects -- Scarcity effects -- Net effects -- B. Methodology -- C. Summary of findings -- D. Review of economic studies -- II. Analysis of land value data in Oregon and Washington -- A. Results from data analysis -- Lane County, Oregon -- Jackson County, Oregon -- Lewis County, Washington -- Kittitas County, Washington -- Comparison of Lane and Jackson counties with Lewis and Kittitas counties -- Baker County, Oregon -- Comparison of Kittitas and Baker counties -- B. Effects of property tax reductions on land values -- C. Interpretation of the data analysis -- III. Review of economic studies: effects of land-use regulations on property values -- A. Effects of land-use restrictions -- B. Oregon studies -- C. Effects of restrictions on neighboring properties -- D. Tax abatement and agricultural subsidy programs -- IV. Conclusions.
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