Conserving Farms Makes Tax Sense, Study Says

Published July 30, 2000

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SAN MARCOS, United States — Farms, ranches and open space generate substantial revenues, yet require far less services than those needed to support residential development, according to a new study that looked at land use in Hayes County, Texas.

According to American Farmland Trust’s Cost of Community Services study, agricultural and open space lands generate three times more in tax revenue than they receive in public services, while residential development spends more on public services than it generates in tax revenue. Such services include schools, roads, law enforcement, and fire prevention.

According to the Trust, when taking all these costs into account, agricultural lands and open space pay more than their fair share of local taxes. For every dollar these lands generate in revenue for the county, school and public service districts, they require only 33 cents back in services.

Commercial/industrial lands provide a similar net gain to the county, needing only 30 cents back for every $1 generated in taxes. However, even though residential properties pay a lot in taxes, they use up even more in services -- $1.26 for every $1 paid in taxes, according to the report.

Population on the grow

Hays County's population has grown from 40,594 residents in 1980 to 91,887 residents in 1999. To accommodate new residents, family farms and ranches have been converted to residential subdivisions.

Each time a new subdivision goes up, the county government, school districts, law enforcement and fire prevention districts are expected to step up their capacity to provide customary levels of services to the newly developed areas.

According to Julie Shackelford, AFT Texas general regional manager, the study results dispel three common misconceptions about developed land versus open land:

"First, the truth is that residential development does not lower property taxes. Rather than expanding the tax base, residential development that is not balanced by business growth and maintenance of agricultural lands and open space ultimately causes property taxes to go up or public services to decline," Shackelford said.

The second misconception, according to Shackelford, is that farmland receives a tax break. "The study shows that even when farmland is taxed at its agricultural value, it is taxed at a fair rate, because it still more than pays for the services it receives."

Finally, the county's open lands, farms and ranches serve several important purposes. "They are not just plots waiting to be developed," Shackelford said.

Since pioneering this type of study in 1986, COCS studies have been performed in more than 70 communities across the United States. While every community is different, COCS studies show for every dollar of revenue generated by residential development, the median cost is $1.15 to provide services to this land use.

By comparison, the median cost of farm, forest and open land is 27 cents per dollar of revenue, and the median cost of commercial/industrial development is 34 cents.

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Conserving Farms Makes Tax Sense, Study Says

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