Sprawling residential development that destroys farmland imposes a net
financial loss on the coffers of local communities, inhibiting their
ability to, among other things, fund quality school systems, according to
a new analysis of three Minnesota towns recently released by the Land
Stewardship Project and the American Farmland Trust. On average, farmland
adds twice as much to local tax bases as it demands back in services,
according to the study.
"Farmland and the Tax Bill: The Cost of Community Services in
Three Minnesota Cities summarizes a study that traces the flow of
revenues and expenditures generated by specific land uses in three
metro-area communities: Farmington, Lake Elmo and Independence. Using
data gathered from the Minnesota Department of Revenue, Office of State
Auditor and the Minnesota Department of Education, the analysis found
that in those three communities, for every $1 in tax revenue generated by
residential development, on average $1.04 was spent to provide extra
services such as sewer lines, streets and law enforcement. In comparison,
for every farm tax dollar raised, on average only 50 cents was spent to
provide services. According to a study conducted in Wright County by the
Minnesota Department of Agriculture, the further away from the existing
infrastructure development is located, the more costly it is to provide
These ratios are similar to those found in studies of farmland
development in Connecticut, Massachusetts, New York and Ohio. However,
they run counter to the common assumptions that often surround
development projects, said Lee Ronning, the Land Stewardship Project's
Sustainable Development Program director.
"Developers and local city governments often consider farmland to
be of no value to the community until it is subdivided into housing," she
said. "This study deflates the argument that developing farmland is
always beneficial to the tax base of an area. This is yet further proof
that sprawling development patterns have expensive hidden costs that far
outweight their advantages."
One of the "costs" of sprawling development may be less funding
for schools. In Minnesota, state aid is used to hold down property taxes.
Because this aid is usually distributed based on population or school
enrollment, it increases the share of education funding attributable to
the residential sector. Because Minnesota's school aid is dependent on
the total property valuation of a school district, as well as being a
function of enrollment, school districts receive less state aid per
student as growth occurs and property taxes expand. Normally, the
expanded tax base would be expected to offset any loss of state aid. But
if residential development is the source of the expanded tax base, then
the increased cost of servicing that development could actually lead to
the need for higher property taxes to fund schools, the study found.
Writes the report's author: "By reducing the gap between
residential revenues and costs, Minnesota's generous level of
intergovernmental aid may be inadvertently accelerating the metro-area's
rate of urbanization ... As the level of state aid increases, the
relationship between who is paying for services and who is receiving the
benefits becomes more obscure."
Farmland protection may be financially beneficial not only
because of its contribution to the tax base, but also because it holds
down property tax valuation. Lower property valuation leads to more state
aid, which reduces the share of local government costs paid for by local
residents and property owners.
The Minnesota study comes at a time when sprawling urban growth
is destroying the state's farmland at an alarming rate. The 21-county
growth corridor from St. Cloud to the Twin Cities to Rochester is the
fastest growing metropolitan area from the northern plains to the eastern
seaboard. The seven-county Twin Cities metropolitan area has lost 235
sqaure miles of agricultural land to urbanization since 1970. Since 1980,
most of that growth has occurred in second ring suburbs. The Twin Cities
area is the third least densely populated metropolitan region in the
country, but one of the fastest growing geographically. The amount of
metro-area land devoted to urban land uses has increased by 42 percent
since 1970, almost double the 22 percent population growth rate during
this same period. If such trends continue, inefficient sprawling growth
will consume 100,000 acres of metro-area farmland by the year 2010.
Agrcilture in the seven-county metro area plays a major economic
role, accounting for more than 6 percent of the state's total
agricultural production. For example, more than 700 dairy farms with
36,000 cows are operating within the seven-county metro area. In total,
metro-area agricultural activity produced more than $500 million worth of
farm output and generated 7,000 jobs in 1990.
"Sprawling growth that wipes out these farms not only wreaks
environmental and economic havoc in rural areas, but sucks resources out
of the inner city and makes us more dependent on an expensive,
long-distance food transportation system," said Ronning.
"Farmland and the Tax Bill" concludes that Minnesota and
metro-area communities should continue to support existing farmland
protection activities, such as the Metro Ag Preserves and the state's
Green Acres program. For economic and environmental reasons, the study
recommends exploring other techniques to retain this valuable resource
base, such as purchase of agricultural conservation easements.
"Farmland and the Tax Bill: The Cost of Community Services in Three
Minnesota Cities" is available by sending $10 to: Land Stewardship
Project, 14758 Ostlund Trail N., Marine on St. Croix, MN 55047; (612)