Highest and Best Use of Central Oregon Land
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In Deschutes County (and across Oregon as a whole) we are witnessing a collision between three camps: 1. Anti-growth/anti-development activists, 2. Growth, but to be allowed only on the terms of special interest groups, and 3. Pro-growth/pro-development advocates.
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Uncorrected, this inevitably leads to escalating prices and an affordability crisis. Nearly everyone acknowledges this. Since demand is exploding, the obvious solution is to develop and build residential and commercial properties to meet the need. |
The conflict is especially challenging since so many people want to move to Central Oregon (for all the reasons each of us did), and there are not enough houses and commercial spaces to meet the need. In other words, our region has a classic economic case of experiencing more demand than there is available supply. Uncorrected, this inevitably leads to escalating prices and an affordability crisis. Nearly everyone acknowledges this. Since demand is exploding, the obvious solution is to develop and build residential and commercial properties to meet the need. Prudently, but quickly. The logic of this seems inescapable. We need to build.
However, emotional factors often prevail. The emotions are valid, but when they needlessly block or delay progress in taking care of the needs of rapidly growing population, we need to step back and take a look at growth rationally.
The Rules Are All Made Up
Often people point to land use laws and regulations as if they are God-given rights or Constitutional provisions. The truth is, they are all made up. When Central Oregon was settled, there were no property boundaries, zoning laws, environmentally protected zones or urban growth boundaries. These artificially created distinctions evolved to meet the changing needs of a growing population. It’s time for them to change again. We should do so using the long-established concept of “highest and best use.”
Highest and Best Use
At a fundamental level, all government decisions should be made with a view to achieving the highest and best outcomes. Given the pressures exerted by special interest groups and obstructionist lawsuits, sometimes the highest and best outcomes are not achieved.
Fortunately, land use can be approached with common sense and rationality. To qualify for highest and best use, a projectmust meet the following criteria:
In appraisals, an entity is economically assessed at its highest or best use to maximize value and increase revenue. Proponents of alternate valuation metrics point out that valuing land through a purely economic perspective may fail to capture important benefits to the public such as clean water, pleasing scenery, erosion control, and recreation. “Public interest value” is potentially the most well-known alternate valuation concept. While public interest value is certainly worthy of consideration, it becomes a much more emotional and subjective approach. Much of the resistance to Central Oregon development falls in the category of public interest value, although not always distinguished that way.
Because of their subjectivity and special interest partiality, public interest value arguments may not lead to the overall highest and best use for a property. Thus, it falls on the shoulders of government leaders to make a rational, evidence-based determination - unswayed by special interest passions - as to the highest and best usage of properties under their governance.
This kind of rational assessment of proposed property development is essential to break the current gridlock currently stymying growth in Central Oregon.
The Rules Are All Made Up
Often people point to land use laws and regulations as if they are God-given rights or Constitutional provisions. The truth is, they are all made up. When Central Oregon was settled, there were no property boundaries, zoning laws, environmentally protected zones or urban growth boundaries. These artificially created distinctions evolved to meet the changing needs of a growing population. It’s time for them to change again. We should do so using the long-established concept of “highest and best use.”
Highest and Best Use
At a fundamental level, all government decisions should be made with a view to achieving the highest and best outcomes. Given the pressures exerted by special interest groups and obstructionist lawsuits, sometimes the highest and best outcomes are not achieved.
Fortunately, land use can be approached with common sense and rationality. To qualify for highest and best use, a projectmust meet the following criteria:
- Physically Possible - Any potential use must be physically possible given the size, shape, topography, and other characteristics of the site.
- Financially Feasible - The highest and best use of a property must be financially feasible: the proposed use of a property must generate adequate revenue to justify the costs of development, plus a profit for the developer/owner.
- Maximally Productive - The use must generate the highest net return (profit) to the developer/owner. A property that could hypothetically be developed with multiple uses might only have one of those uses as its highest and best use.
- Legally Permissible - "Legally permissible" can be a tricky conceptual test, because even uses that are currently not permitted may be considered. This happens when there is a reasonable prospect that any limiting regulation, zoning, deed restriction, etc. can be changed to permit the proposed use.
In appraisals, an entity is economically assessed at its highest or best use to maximize value and increase revenue. Proponents of alternate valuation metrics point out that valuing land through a purely economic perspective may fail to capture important benefits to the public such as clean water, pleasing scenery, erosion control, and recreation. “Public interest value” is potentially the most well-known alternate valuation concept. While public interest value is certainly worthy of consideration, it becomes a much more emotional and subjective approach. Much of the resistance to Central Oregon development falls in the category of public interest value, although not always distinguished that way.
Because of their subjectivity and special interest partiality, public interest value arguments may not lead to the overall highest and best use for a property. Thus, it falls on the shoulders of government leaders to make a rational, evidence-based determination - unswayed by special interest passions - as to the highest and best usage of properties under their governance.
This kind of rational assessment of proposed property development is essential to break the current gridlock currently stymying growth in Central Oregon.
