Professor Mark J. Perry's Blog for Economics and Finance
Good News: City officials in Holland, Michigan will allow a 13-year-old to reopen his hot dog cart at a new legal location just two feet from the original illegal location.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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Hydra, are you in Fauquier County?
Did a little digging on the VA farm. From the video clip of the notice, the property is owned by Piedmont Agriculture Academy LLC in Sienna, VA about 40 miles away. This is at the Bonita's home address. There is no house on the farm. It's about 64 acres and primarily pasture rather than row crops, but they don't raise cattle. They look to primarily operate as an agri-tourism business. Here's another business name they use in addition to Liberty Farm, Paris Barns, so you can see they have some small scale vegetables, emus, goats, bees. But primary income appears to be scheduled tours, speaking engagements, etc.
That said, this Board of Zoning and Appeals are nuts. Here is an account of another ongoing case where they are trying to apply retroactive zoning to another resident. And apparently the wineries in the county are getting the shaft too, all contrary to state law.
Oh yeah.
This is a freaking mess. A lot of explanation needs to go on here.
Fauquier County and Ludoun county are adjacent to each other. Forty uyears ago, each county had approximately the same population, the same per capita income, and the same per capita asseessed value of property owned.
Loudoun county endured a long series of flip flop boards of supervisors, alternately pro growth and anti growth. This prevented any unified policy and growth won out, by default.
Fauquier County had a long standiing unified policy against any kind of growth. At present, 26% of the county is preserveed under permanent conservation easement, and the county has a policy of using taxpayer money to buy up development rights to prevent future develipoment. (More on this in a moment).
In the intervening years, Loudoun became one of the fastest grwoing counties in the nation, adding more than 25,000 people in recent years. (Many migrating in search of government funded jobs and locus with good lobbying prospects).
The end result is that even after having added all those people, the per capita income is higher, and the per capita value of assessed property owned is higher in Loudoun than in Fauquier. This says nothing about un assessed proeprty like retierement accounts and other investments.
I estimated a few yeas ago that the difference amounted to $13 billion dollars. And yet, Fauquier officials (and their wealthy conservationist cronies) insist on claiming that the conservationist policies in Fauquier county have saved thari citizens money, because the taxes are low.
As I have pointed otu many times total Cost = Productione Cost + External cost. + Government Cost.
By focusing on government costs ( as required by law) the local government makes a huge mistake. they assume government cost is the onely cost.
Now, Fauquier County has a lovely and unmistakeable rural, and bucolic charm. That has a certain value, but it is not free. Compared to neighboring Loudoun county, it has cost local citizens over $13 billion dollars.
A clean environment, is not free. That is why only wealthy areas have one, and why, as noted in a recent post, communist areas are dirty.
Almost all workers in Fauquier commute to other counties to work. The money from those (more developed) counties comes back here to support "family farms" like mine.
Essentially, such farms are operated as charities: they drop huge amounts of money on the local economy - money which came from elsewhere. Based on this fact, the local wealthy environmetnatl interests make the claim that (echoed acoss the country by American Farmland Trust and others) "We have to save our family farms, because they pay twice as much in taxes as they cost us in infrastructure."
So, You can imagine how popular I am when I write to the local paper or appear in meetings to ask, "If you really want to save us, why do you charge us twice what we cost you?"
This is an argument that will be familiar to many CD readers and contributors.
That is part of the background. it gets a lot worse. The issue with this farm is parallel with a larger dispute. The area has become the focus of a large winery development. In only the last few years ther have been nineteen wineries developed within five miles of my farm.
This is a huge development. After decades of repression by local government, finally something was happening. Millions of dollars wee spent. Hundreds of temporary and permanent jobs have been created. Lmos and tour busses flock to the area on weekends.
One of these winery owners is a member of my church. I said to him once, "I don't get it. These wineries are sprouting left and right, but I cannot see the economics in it."
Now, this is an extremely wealthy guy. Extremely. And he says to me, "There is no economics, it is just an expensive hobby, mostly tax deductible."
So again, we see that these family operatons are primarily charities to the county and the local economy. I know one contractor, ( an electrician and excavator) that has worked almost full time at one winery for two years.
So, where exactly is the problem? One would think that anyone would love this kind of (more or less) environmentally friendly businesss that brings in a lot fo money from outside.
My farm does better than many local farms: it breaks even on farm operatons. My customers are horse owners who have small farmettes, and even larger operations with many horses that do not have sufficient pasture to winter over their horses.
I sell them high quality horse hay. Working part time I sell between 50 and 300 tons of hay a year, depending on my regular job, weather, and how much equipment I break. The farm also has other busineesses.
But under GAAP I would have to charge myself rent for the value of the land investment. If I did that, I would have to fold tomorrow, along with virtually every other farm in a five county area.
Except afor a handful of large farms with big backing (and government subsidies), every farm in this area loses money, year after year.
Some of that money is spent buying a "lifestyle" that comes with the farm and is hard to quantify. Such a lifestyle includes the baby lambs and colts and all that. It isncludes having chilren that accept obligation an chores. It also includes the case of a local person who accidentally ran over a child who was playing hide and seek in the tall grass, with a bush hog.
Suffice it to say that there is a mythology around farming in this area. there is a nearby p[iece of proerty for sale that is (was) part of a much larger farm. 100 acres, priced (offered) at $18,000 per acre. Zoned agricultural.
If you look at the agricultural budgets produced by tha agricultural school at VA Tech, you see how hard it is to net more tha around $250 per acre. You simply cannot pay the interest on $18,000 and acre at that rate.
Amd yet much of the county is zoned for agriculture only. This is interpreted to mean no retail activities. I can sell ahy, but I cannot offer hay rides. winwriwas cxan make wine, but they may not offer wine tastings except under very limited conditions (25 persons, close at six PM).
The county is presently being sued by several wineries because of recent passage of a rule to limit their activities. This rule was caused by a few locations that (allegedly) basically operated wine roadhouses, with raucus parties, wedding receptions, and loud music.
I argue that zoning property of such value for agricuylture only is tanatamount to having a commercial proerty in town that is zoned only for buggy whip manufacturing ( or maybe film developing). Not only can you not make a living at it but you cannot get out, because who would buy such a property?
Consider a coule of the large farmers here, one manages thousands of acres,( not all owned) b ut it is mainly alongside major highways. His other business is a heavy consrtuction business taht does siet wrok and excaation. guess who repairs his farm ewuipment? Guess what happens when a farm (eventually) gets developed?
I do not have a problem with this. He is a great guy, who treats his employees well and hires a lot of local help. I am a cquainted ith another family which over generations has successively wned and developed farms later subsumed by urban areas.
But, if we consider such people in the larger view, are such people farmers, or developers?
The local political situation has developed to put a stop to this. As a result, more than 26% of the county is under permanent conservationeasement, with no end in sight.
Two local papers describe the sithuation this way: One said simply taht the farm sales and winery event businesss was borught to a halt because the :neighbors wer annoyed" , the other quoted froma letter obtained under FOIA concerning the farm sales in question: The letter of complaint to local officials simply said : We do not want any business conducted at that farm."
Now, people have a right to enjoy their own property, especially when they have paid millions for it. Or, equally, when it has been in their family for generations.
But in this area, and in many others, it has become the case that a five dollar complaint is sufficient to shut down a $50,000 business. Or more. It is not sufficient that one be allowed to enjoy their own property, thay have to be allowed to enjoy their neighbors as well.
It has become completely out of control. Yet I cannot blame "the government". It is doing exaclty as (its most moneyed) constituents ask.
I am not certain, but I believe I recently met the persons that own the farm in question. If I am correct, they may be described as somewhat in the "hippie: genre. As such they do not fit in with the wealthy locals. If they were radical Muslims they dcould hardly be more out of place, but that is no excuse for what happened to them.
So, this event is merely the culmination af over thirty years of concentrated political policy, which is designed to preserve the land at the expense of people, particularly those that are unfortunate enough to own it.
Some years ago, my former county supervisor told me and my wife to our faces: "My plan for your property is to have someone wealthy buy it, so that they can put it in conservation easement, and nothing will ever be built there."
Fauquier county is famous across the nation for its conservation efforts, which a Wisconsin organization once noted is supported by extremely wealthy interests.
In the twenty five years I have been here I have watched the county chip away and chip away at every opportunity land owners might have. This example is only the latest of a long string of events.
Consider the purchase of development rights program. When zoning was fisrt introduced the requirements wer pretty slack, like one hose per four acres. And these restrictions wer bought with the promise that a numbero f adminsitrative or family lots would be allowed. Over time the restrictions became worse the lot size larger, and eventually the family lots wer rescinded. some areas have been down zoned six times. A sliding scale was applied (retroactively) that meant that depending one th size of the (historically) original property, fwer lots wer allowed and more of the property had to be reserved as one piece, meaning that (once were once large) properties could only sell off 15% of their land. And then, only in pretty large lots.
Each time a downzoning occurred, the argument was that, if there was no subdividsion plan in place, nothing had been lost, and so no compensation was required.
My prior supervisor explained to me that the county was very careful about skirting the laws about gentrified zoning.
Eventually, the county had pushed people far enough, and they had problems downzoning land for free. At taht point they introdused teh Purchase of Development Rights program. What this meant was that If you had any development rights left, the county would buy them.
In other words, the development rights that they previously claimed had no value when they were expired, suddenly became valuable proerty, which could ber recoreded on a deed and sold, even though there was still no "vested interest" as previously claimed.
The previosu development rights wer either stolen or worthless, but now they were suddenly worth using taxpayer money to buy.
It gets worse. Once the county bought this newly valuable property, it gave it away, to some conservation agency to hold.
As my previous supervisor explained it: "That puts it permantly out of reach of the zoning laws" .
Now, ther are policies about how the county disposes of surplus proeprty, and usually that involves an auction. If the county was engaged in buying fire trucks and then giving them away to fire truck museums, the populace would be outraged, but this was so cleverly sold that no one noticed.
The case with this farm s very simple., the county is continuing ists policy of turning the county into private parks, which are owned by EXTREMELY rich people, and who get huge tax breaks because they are in conservation easement. They are not even required to farm the proeprty. Once it is in easement, they can let it go to jumgle or have eighty acres of lawn.
The result is that a 200 acre proeperty not in easment might be offered for seven million, and a two hudred acre property that can never be developed is only around two million.
Either way, it is not going to be a farm. Either way, no ordinary person can get a piece. So the $2million dollar price represents a huge discount to someone who can afford to do nothing with that kind of money, and all in the name of conservation.
And that, is exactly hat my former supervisrl hopes will happen to me. it is exacltly what the annoyed neighbors hope will happen to that "educational" farm.
Meanwhile, there are about ten large commercial farms in the county that get better tahn $80k per year inn government subsidies. I know one of these guys, and he will be happy to tell you how profitable a well run farm can be.
Obvously, I have my own views and prejudices on this, since the county has taken something like $33 millon in potential opportunity from me, in favor of production of more hay.
That is a lot of hay. Maybe 250 years worth. I do not think the local government is that freaking smart. I do not think current county adminsitrators have the right to reach out of the grave and control what happens in the future by disenfranchising those that might one day vote on zoning issues.
Nevertheless, I have tried to provide some dispassionate history on a situation that has finally hit the national and even intgernational news.
In fact, I first read of this story in the San Francisco Bee.
At one time, I wrote a long series of letters to the local business oriented newpaper on subjects such as these. Eventually the conservation newspaper, owned by an extremely wealthy conservationist, bought the more conservative and business oriented paper, and shut it down.
I am not claiming it had anything to do with my letters, but I would like to think so.
(In those days I used a spell checker).
The winery situation is similar to the farm situation. Some people, including some vintners have an idyllic picture of what a vineyard should be: a garpe grower who quietly makes fine wines with no use of chemiclas and sells the entire production to one or two wholesalers bringin in the minimum amount of trucks and traffic.
Practically speaking the wineries need more than that to stay in business, so some host wine tastings wedding receptions and other events.
Under the new winery ordinance most of that is rulled out or restricted. Furthermore the ordinance appears to be directed at one winery in particular.
Under the new ordinance wineries may not offer food, must colse at 6:00, earlier in winter, amd may seat no more than 25 persons.
In addition the vineyard must be at least 25 acres, and be situated at least 3000 feet from the road. One of the wineries most afected seats fifty people, is located on 23 acres, and is situated with a setback o 270 feet.
Fauquier county has a long history of passing and enforcing such ex post facto laws. In at least one case the county prevailed at the supreme court, as I understand it.
The winery business is one of the best things to happen to Fauquier agriculture, and business in general, for years. In spite of the county motto "Supporting Agriculture in a Business Friendly Environment" the true facts are that a relative handful of peole do not want ANY development here, period. I know of at leadt three businesses that wanted to locate here, but after the grilling they got from county officials simply gave up and went elsewhere.
Virtually every land use requires a special exception permit. To get a rezoning requires multiple engineering studies: drainage plan, soils map with samples taken every ten feet, traffic study, archeological survey, enevironmental studies, flora and fauna studies, etc. Simply to fill out an application for rezoning, which is sure to be turned down, can easily cost over $100k.
This is supposed to keep out the "big developers" but of course, only the biggest developers can afford to playin that game, so all of the small local builders (that used to make much of their trade off the so called family or administrative lots) are either out of business or work outside the county.
Overall it is a case of environmental consiousness run amok. Nor is the birthday party situation the first such case. A few years ago a man was operating kiddy horse shows, where children cold come and show off their skills competing for a small trophy. He was shut down for causing too much traffic and operating a commercial business.
County officials have stated publicly, on numerous occasions, that any new home valued at less that $710,000 does not pay enough in real estate taxes to cover the county services it requires. Since the average home in the county is only areound $230,000, one wonders how the bills get paid. The trick to this argument, of course,is that real estate taxes are oly about one third of the county revenue, and so it is unfair to demand that new houses pull their full weight on real estate taxes alone. There are a bunch of other problems with that argument too,although it is one that is widely used n the 2700 counties that have some kind of anti-growth ordinance.
At the end of the day, I could easily make more money selling hay rides than selling hay, but that is considered a comercial eneterprise, so it is forbidden. If i was allowed to put up a modest rental property, to rent out to some fireman or teacher, they could live quite nicely, and the income from that rental would be ten times what the rest of the farm makes.
If I was allowed to build something like that every 20 years, then in 200 years 95% of the farm would still be in agriculture, or forest. But that is not good enough for the local conservationists, who would prefer that virually all of the county be placed under permanent conservaton easement.
One of the methods the county uses to prevent development is super restrictions for things like septic fields. The requirements are so stiff that it takes many acres to comply. No alternative septic systems are allowed. when the state over rode the county on this there was a collective gasp of horror, that the county had lost some of its control.
The county had a flood plain ordinance, and they increased the size of the required floodplain set backs twice. The flodplain designation is supposed to protect the streams and water supply, which is a reasonable goal. But when the county tried to create another kind of setback - a floodplain protection zone to protect the land in the floodplain, that wsas finally too much. Thosusands showed up at the hearing to protest and the supervisors backed down.
As it is, the flood plain designation includes dry stream beds, so it is entirely possibe in some parts of the county to have much of your farm listed as off limits for use, if you have several dry creek beds with a 400ft setback, you can run out of usable land pretty quick.
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