Development-rights buyout has slow start - Property values, federal funding turn out to be less than expected.

Aubrey Cohen, The Bellingham Herald

5/28/03

Bellingham, WA - Bill DeGroot's dairy farm is the kind of farm that a new county program was designed to protect.

Residential development has moved in around the farm, which occupies 40 acres along Aldrich Road, east of Ferndale. DeGroot even tried unsuccessfully to get the zoning on his property changed from agriculture to residential.

The new program aims to pay farm owners threatened by residential development the difference between what farmers can pay for the land and what it could fetch from those who want to build homes. This should allow the farmer to profit without developing the land, and keep it affordable for future farmers.

But the difference is based solely on speculation when it comes to farms like DeGroot's, which are not now zoned for more homes, and county officials are learning that "speculative value" generally doesn't amount to much. Federal funding for such farmland-protection programs was lower than expected, too.

As a result, the county's initial round of development-right buyouts may be smaller than officials hoped. Owners of nine farms applied for the buyout program, but the county is seeking federal money to buy development rights on only three farms. County officials hope to know by June which, if any, purchases the federal government will fund.

Insulted

The county is focusing its first two rounds of buyouts on farms not zoned agricultural, areas of unique farmland, and farms like DeGroot's that are along developing areas and could help serve as barriers against development.

The county ranked DeGroot's farm sixth out of nine farms in the initial round of applications. But when an appraiser estimated the difference between farming and speculative value on agriculture-zone farms, he found little difference.

"There was this notion that there was an inflated value," county planner Kraig Olason said. "We found that the majority of farmland is selling at farmland prices."

The appraiser estimated there might be a difference of $200 to $300 per acre between farming and speculative value, Olason said. "Two to three hundred (dollars) is not enough to entice anybody to talk to (us)."

DeGroot certainly was not interested in the county's offer for his development rights.

"I told them I found it offensive," he said. "That's an insult, really."

Olason said the county cannot pay more than what an appraiser finds the land is worth.

Other farms

The appraiser brought back higher estimates for three farms - two with residential zoning, and one that is just outside of Lynden's urban growth area and has rights to another home under agricultural zoning.

For Dale Gorsegner - a dairy farmer on East Hemmi Road with 40 acres zoned for one house per five acres - the appraiser estimated a range of $306,700 to $366,400 for his development rights (the difference between farm and development value).

"I think it's reasonable," Gorsegner said of the price. "I feel comfortable with it."

Gorsegner said he has been impressed with how fast county officials have moved on the purchases and how serious they are.

"I think it's unfortunate they didn't get on this sooner, a few years ago, to get some of the property that's gone into buildings, that probably should have been preserved," he said.

Gorsegner's farm is No. 2 on the county's wish list, behind 75 acres that Howard and Judith Holz own just to the east and 95 acres that Rick and Debbie Mouw own on the west side of Berthusen Road, near Lynden. All three owners have signed letters of intent to sell their rights.

The county has applied to the U.S. Department of Agriculture for $899,580 to pay for half the high estimate to buy the rights and would cover the other half with money from the county's Conservation Futures Fund.

The USDA, however, has designated just $1.5 million for all of Washington, down from the $7 million to $8 million projected earlier this year. Olason said Congress approved less money than expected and more states applied for the money.

Olason said he would be surprised if the USDA approved all of the purchases or none of them. He said he would recommend the county buy the Holz rights on its own if the USDA approved no purchases.

"At a minimum, we need to do one," he said. "We spent two and a half years getting ready."

Changes coming

After the first two rounds of purchases, county officials will re-evaluate the program, and may look for other ways to protect farms with agriculture zoning.

One option might be for the county to buy farms as they become available, put conservation easements on them to prevent future development, then sell them back to farmers for $200 to $300 less per acre, or lease out the land.

DeGroot said he had neighbors prepared to apply for development-rights purchases until he got his offer. Now, he and his neighbors again plan to seek residential zoning on their farms.

"I will do anything I can within my power to get it rezoned so that we can get it developed," DeGroot said.

Reach Aubrey Cohen at aubrey.cohen@bellinghamherald.com or 715-2289.