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Logan County faces quandary in urbanization of farm, ranch land

When the Logan County Planning and Zoning Commission begins work on the county’s next 10-year master plan later this year, it’s a good bet that wind turbines will be on the agenda.

Whether that plan will include recommending stricter regulations governing where wind turbines, solar panels and oil and gas wells can go is yet to be seen. The Logan County Commissioners, who would have to write those regulations, are loath to infringe on private property rights.

“Overall, I’d say we are very pro-property rights,” said Joe McBride, chairman of the Board of Commissioners. “I’m not really pro- a bunch of regulations. As you know, I think it takes away some of the flexibility we need to allow people to use their property to their best advantage.”

It’s no secret that energy leases – money paid to landowners for locating wind towers, oil and gas wells, and solar arrays on agricultural land – can be the difference between keeping the family farm and losing it. Such leases provide much-needed revenue for farms and ranches strapped by low commodity prices and rising production costs. And Logan County has been a “right to farm” county since 1999, when County Commissioners Lyle Schumacher, Roy Wheeler and Jim LaForce signed Resolution 99-50.

The “right to farm” resolution says, “It is the policy of Logan County to preserve, protect and encourage the development and improvement of agricultural land for food production and other agricultural products.”

The policy lays out detailed procedures to be followed when agricultural practices conflict with non-ag neighbors. The process is clearly tilted toward the ag producer’s advantage. Thus, the county already is bound to protect farmers’ and ranchers’ property rights.

There are others, however, who see tighter land use regulations as a way of protecting their property rights. That was made clear when NextEra Energy’s Niyol Wind Farm near Fleming ran into serious opposition from landowners in the area who saw the wind farm as damaging their property values. During public hearings on the wind farm, the group handed in a giant binder full of information and arguments as to why the wind farm should be subject to severe setbacks and other restrictions, and later – too late to be considered – submitted a 177-page report showing that wind turbines suppress property values of surrounding homes.

McBride told the Journal-Advocate he hasn’t read the report, written by Kurt Kielisch, president and senior appraiser for Forensic Appraisal Group of Neena, Wisc., because it was submitted after public comment had closed and couldn’t be considered. In light of the circumstances, McBride said, he had to consider the study “just one guy’s opinion.”

That guy, however, did a considerable amount of homework before submitting his opinion, and the report includes research on both sides of the question. Most of Kielisch’s conclusions are based on nine research projects conducted in the U.S. and Canada. Some of the projects were done by scholars at Berkley National Laboratory and Tuttle University, while others were done by appraisal specialists like Kielisch.

The report also cites nearly 160 sources on such subjects as noise, health issues and environmental impact. While Kielisch acknowledges that scholarly research unfailingly concludes that there’s no documentable connection between wind turbines and the health of those who live near them, there is a growing body of anecdotal evidence that indicates otherwise. Kielisch even notes that the World Health Organization declared as early as 1999, “The evidence on low-frequency noise is sufficiently strong to warrant immediate concern.”

The report’s bottom line is that the Niyol wind project will depress the value of homes in the area by between 22 percent and 37 percent, depending on proximity to wind turbines, with an estimated total loss of value of just under $3 million.

But real estate appraisers, property tax assessors and municipal planners all see a piece of property through different eyes. Logan County Assessor Peggy Michaels said that, while there’s no way to know what the real estate market will do, she has not seen property values decreased because of wind turbines.

“We have no proof that wind towers have hurt property values,” Michaels said. “I would never say they’ll hurt property values with any confidence.”

Tax assessors and their appraisers have to take a rather narrow view of the property being assessed. Colorado state statute allows for only the “market approach” to be considered for residential property valuation. Sales of similar homes, taken from the current study period, are adjusted for market trends and property differences such as size, location and age.

Value, however, isn’t the same thing as price. When homeowners talk about “property values,” what they really mean is the price they could get for selling their home. So, having wind turbines built nearby won’t necessarily affect what an appraiser says the home is worth, but if no one is willing to pay that price, is it really worth that?

That, according to veteran real estate agent Bob McCarty, depends entirely on the buyer.

“Are they pro-wind power? If so, the wind tower might not be a big deal. It depends on which side of the fence you’re on,” McCarty said. “If there’s anything detrimental in the mind of the buyer, it’s going to affect time on the market and the actual contract price.”

If enough homeowners in a neighborhood have to drop their sale prices because of wind turbines, eventually the tax assessor’s market approach is going to reflect lower property values. That could have a detrimental impact on an area that has seen growing “exurbanization” as young, affluent families have moved in. Logan County Planner Rob Quint said it’s almost impossible to track exactly how much urbanization has occurred in the Fleming area, but he will confirm that there are more subdivision exemptions in that area than other parts of the county.

“Some of these subdivisions are farm families breaking off a piece of property for their kids to build a home on, so is that really what you would call urbanization?” Quint asked. “On the other hand, we are seeing families who work in Sterling but they want their kids to go to school in Fleming, so they’re buying property out there. I would definitely say that’s a trend in that area.”

The question for those writing Logan County’s land use master plan, then, might be, is it really a good idea approving a wind farm that, according to at least one well-informed source, could drive down property values by as much as $3 million? Wouldn’t that hit the county’s bottom line with decreased property taxes?

Not so much, as it turns out. Quint said taxes on that allegedly-lost $3 million in value is a drop in the bucket compared with taxes on agricultural land. And all land outside of organized towns is zoned agricultural.

When it comes to tax revenue, Quint said, ag land generates much more than residential land. That’s because, thanks to something called the Gallagher Amendment, Colorado taxes commercial, business and agricultural land at 29 percent of its value. Residential property is taxed at only 7.15 percent of its value.

“It just makes sense that 29 percent on a million dollars worth of ag land is a lot more than 7 percent on a million dollars of residential property,” Quint said.

It’s important to note that, while a home site in rural Logan County may be in the agricultural zone, it’s still taxed at the residential rate. That includes the home, outbuildings, and land immediately surrounding the home. So while a 5-acre “ranchette” may be zoned agricultural – to zone it residential would be “spot zoning,” something Colorado law prohibits – it’s still valued for tax purposes as residential.

That means it is in the county’s best interests to keep as much land as possible zoned agricultural, something the Planning Commission will no doubt keep in mind as it works on its master plan for the 2020s. One question that may have to be answered is whether an energy lease that keeps a family on its farm or ranch is covered by the county’s “right to farm” resolution.

Whatever regulations the County Commissioners end up writing, the county will have to walk a fine line between competing interests. During the public hearing on the Niyol wind farm’s conditional use permit, Chairman McBride acknowledged the difficulty of making a fair decision.

“We want to protect people’s property rights, but with something like this, whose property rights do you protect first?” he said. “It’s not an easy question to answer.”