Park expansion at Pisgah may come at what price?
M e a s u r e 3 7
The Lane County commissioners have a chance to dramatically expand Mount Pisgah, one of the metro area's most beloved parks.
But what price are government agencies and the public willing to pay?
Wildish Land Co., the Eugene gravel company, wants the county to pay $26 million for 1,200 acres southeast of Eugene-Springfield that could be added to county-owned Mount Pisgah and the Howard Buford Recreation Area. In size and cost, it would be the county's biggest parkland purchase in about 30 years.
But determining a property's value can be complicated. And in this case, it could be very complicated, because the price Wildish is asking for hinges on Measure 37, the two-year-old property-rights law that itself is hotly disputed and subject to conflicting interpretations.
Critics, in part citing flaws in an appraisal commissioned by Wildish, say $26 million is too much. Wildish replies that the price is right, given the land's potential for development under Measure 37.
The county has begun trying to figure out how much it's willing to pay, and says it will obtain its own appraisal and conduct its own legal analysis.
In a way, deciding on a fair price is simple.
Charles Thompson, the Eugene appraiser hired by Wildish to estimate the land's value, said a fair price, ultimately, is whatever a buyer and seller agree to.
"It's that mystical number they come up with," he said.
But the Wildish price tag already is generating debate that is far from mystical.
The county since the 1970s has zoned the Wildish land for mining, farming and logging. Earlier this year, Wildish argued that, under Measure 37, the company is entitled to monetary compensation or to a waiver of the land use rules that block Wildish from building hundreds of homes there.
The company says that it bought the land in the 1960s, when the county allowed housing there.
Wildish argued that the restriction to mining, farming and logging hurt the land's value and should be waived under Measure 37. The commissioners earlier this month agreed, and exempted the site from the zoning rules.
The company has said, however, that it would prefer to sell the land for a park, and it hired Thompson to appraise the site.
Thompson used two methods to value the land at $31 million: sales of comparable large tracts, and the potential value of the individual lots if the land were carved into a subdivision. (In its offer to the county, Wildish cut $5 million from the $31 million.)
After reviewing sales of other similar parcels in the state, Thompson said the Wildish land as a whole could sell for $25,000 an acre, or a little more than $30 million.
Or, if Wildish carved the property into a subdivision, it could yield 408 home lots, based on a construction engineering report commissioned by Wildish. Using an average lot sales price of $210,000, Thompson calculated the gross lot-sales revenue - $85 million - and subtracted development and other costs, arriving at a price of a little over $31 million.
Professor weighs in
But Bill Jaeger, an associate professor at Oregon State University who has studied Measure 37, said Thompson's reasoning is "problematic." Complications surrounding Measure 37 could dramatically lower what a buyer would be willing to pay for a housing parcel on land where zoning restrictions had been waived under Measure 37, said Jaeger, a member of OSU's graduate economics faculty.
The state's legal opinion is that the development rights that Wildish or any other Measure 37 claimant wins to build on a parcel cannot be transferred to a buyer, Jaeger said.
So, Jaeger contends, "the buyer has the land, but not the waiver (to build). ... The buyer would not be able to build."
If, on the other hand, Wildish were to build the houses and then try to sell them, the buyers would own houses that are out of compliance with the mining/farming/logging zoning on which they sit, Jaeger said.
That raises serious questions about whether the houses could ever be altered, or rebuilt after a disaster, he said.
And it raises questions about whether lenders would even provide loans for initial home construction, given these concerns, Jaeger said.
In setting the land value at $31 million, Thompson compared the Wildish site and its potential 408 lots with other recent similar-sized sales. In the appraisal business, that's called using "comparables."
But Jaeger said the only fair comparables to use would be sales of other properties that are similarly the subject of a successful Measure 37 waiver claim. And neither Jaeger nor Thompson knows of any such comparables.
`Unless (Wildish) can go out and find examples of properties with similar kinds of non-transferable waivers and base their (price) estimates on those, then I don't think it's a valid appraisal,' Jaeger said.
Thompson said he didn't evaluate the Wildish land in light of lot sales on other Measure 37 lands because there aren't any.
But he stood by his appraisal, saying it was done as dictated by Measure 37 - it compared the land's value with and without the restrictive land use rules.
Thompson also said he expects the courts ultimately will decide that development rights can be transferred from the land owner to a buyer.
Musumeci offers critique
Developer John Musumeci, of Eugene-based Arlie & Co., also took Thompson to task over the appraisal.
The value set by Thompson doesn't adequately reflect a host of hurdles that would face any developer who wants to put a subdivision on the property, Musumeci said.
Those obstacles include slopes, floodplain and environmental concerns and the possibility of "massive" public opposition, he added.
Musumeci's comments follow a failed attempt by a nonprofit group headed by Musumeci and his wife, Suzanne Arlie, to buy the Wildish land and designate it for public use. Musumeci said his talks with Wildish went nowhere.
Thompson rejected Musumeci's arguments, saying he considered development hurdles in establishing the land's value.
The county team that is reviewing the Wildish offer will rely on its own legal experts regarding questions on Measure 37, said Jim Johnson, the former Eugene city manager hired by the county to manage the county team.
The team will secure its own appraisal of the land's value, and will review whether, in fact, 400-plus houses could be put there and how much the lots would be worth, Johnson said. The team may critique the Wildish layout for home sites or do its own engineering study, he added.
Wildish's site plan for the subdivision was drafted by Poage Engineering & Surveying of Eugene.
Traffic impact questioned
The Poage plan is based on a number of assumptions that might not pan out in a more detailed analysis of the site. For example, the plan calls for 10 wells that would feed a shared water system for the entire 408-lot development. It calls for individual septic systems on most of the lots, and shared septic systems on others.
It's unclear whether traffic from the subdivision would clog public roads leading to the site, and whether government agencies could require a developer to pay for expensive roadway upgrades.
Wildish has not submitted a traffic impact analysis. Traffic impacts could affect the sale negotiation, and Johnson said the county might analyze the subdivision's traffic impact.
If major public road upgrades were needed, that could have the effect of lowering the land's value.
The county team also may consider what parkland sells for, Johnson said.
The Wildish land is offered for $21,000 an acre.
Parkland varies widely in price. Earlier this year, the state Parks and Recreation Commission bought 80 coastal dune acres from Lane County for $10,000 an acre. Eugene has paid $5,000 to $27,000 an acre in recent years for land along Ridgeline Park in south Eugene.
Still, at some point, Johnson said, commissioners will face the question: "What is a willing buyer - Lane County government - going to pay a willing seller to add that piece of property to Lane County parks inventory?"
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|Title Annotation:||Government; Property-rights law could complicate value assessment of 1,200 acres offered for sale|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Dec 26, 2006|
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