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Setbacks might boost land values

Setbacks might boost land values

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There has been recent media coverage of the potential impacts of a county stream setback ordinance on assessed values. My responsibility as Napa County Assessor under Proposition 13 includes valuing properties when there is a change in ownership, new construction or a decline in value.

I want to clarify at the outset that there is no way of predicting the impact of a stream setback ordinance, or any other local agency regulation, on assessed values in the short or the long-term other than the potential short-term impact of uncertainty over the terms of an ordinance when finally adopted.

Even if an effect could be determined, it would not be clear whether that effect would be to reduce values or enhance them. Because there is only a limited amount of land in Napa County, any regulations such as slope prohibitions, streamside setbacks, etc. that render land more scarce may tend to drive up the value of the remaining land over time.

Napa County has a long history of debate over the impact of local agency regulations on property values. One of the primary arguments against the agricultural preserve passed unanimously by the Board of Supervisors in 1968 was that it would reduce property values by raising the minimum parcel from one acre to 20 acres. The same argument was heard when the board raised minimum parcel sizes between 1973 and 1980 from one acre in most of the county to 10 acres near the municipalities and 40 acres in the rest of the unincorporated area. These parcel size increases had the effect of essentially halting parcel divisions within the buffer zones around the municipalities. Again the concern over reduced property values came up when the board raised the minimum parcel size in most of the unincorporated area from 40 to 160 acres.

In the 35 years from 1967 through 2002, the only year when total assessed value of the county decreased was the year Proposition 13 passed, freezing values. The reduction that year was only one-tenth of one percent. The average assessed value increase in those years was 10.3 per cent. Vineyard land values have steadily increased since the mid-1960s when the transition to premium winemaking got underway in the Napa Valley. The rate of increase has varied from gradual to rapid during different periods, but the trend has always been up.

In the macrocosm of influences on vineyard property values, county conservation regulations are a relatively minor player. The major issues are the economy in general; the health of the wine industry including issues such as phylloxera and Pierce's disease; the land-use planning environment which ensure the long-term health of the industry such as the agricultural preserve, large lot zoning, general plan policies which channel urban growth to urban centers and the special nature of Napa County's wine-producing environment versus other parts of the nation and the world. I do not believe that a detailed study of vineyard transactions between 1970 and 2002 could identify any effect from county conservation regulations.

An old saying in the real estate business is that the value of a piece of property depends on three major factors: location, location, location. While there may be cyclical influences such as economic conditions, tax policies and interest rates that impact property marketability, the physical location of the property is key. There is what I call the macro-geographic issue of the region, state and metropolitan area that will determine buyer preferences. A job seeker may need to come to a high-tech, usually urban, area rather than a farm community; a retired person may be looking for desert or seaside climate which rules out many parts of the United States, while other persons may be interested in the cultural offerings usually associated with a city as opposed to a more rural area. Napa County enjoys a competitive location advantage because of the unique nature of its soils and climate for grape-growing, the special quality of life provided for its citizens and the measures taken by local land-use planning agencies to protect these resources and amenities.

(John Tuteur is Napa County Assessor.)

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