Culpeper County is booming, and demand for building lots in Culpeper is not likely to slow soon. Because of County Ordinances and demand for land in Culpeper, farms are being divided into 5-25 acre parcels.
As a result, farmland is being divided into land too small to be operating farms in most cases and being sold to individuals who want to live the beautiful rural area of Culpeper but generally do not want to operate a farm. Culpeper needs to alter its zoning ordinance for agricultural zones, and larger parcel sizes are not the solution. I believe the policy of time-based subdivision and minimum 5 or ten acre parcels is leading to the devouring of more farmland for homes than is necessary to meet current demand. Additionally, I agree with Jerry Kilgore that time-based subdivision is illegal. See his opinion here. Larger parcels will merely increase the pace at which farms become big homesites. Additionally, the mere proposal of a downzoning will lead to a rush of subdivision applications and lawsuits. I believe solutions exist. I have devised a proposed amendment to the current RA and A1 zoning in Culpeper County that I believe would preserve more farmland, offer economic benefits to those that did not want to subdivide and not harm the economic interests of investors and developers. You can view a sketch of my proposal by clicking on this sentence. If anyone has comments regarding the solution or has input that would improve my proposal, I welcome it. Further, if anyone has a solution they believe to be better for all constituencies, I welcome it. In my opinion, for a solution to be better than the existing ordinance, more farmland needs to be protected while the aggregate value of the land in the affected zones needs to increase by the change in the ordinance. Mere downzonings would decrease the value of land in the current market, and mere increases in permitted densities in particular areas would reduce farmland in some areas while offering underserved financial windfalls to those receiving increased densities.
There is a lot of money invested in Culpeper County land by investors, developers and builders. Additionally, most residents of Culpeper County that are landowners likely have a majority of their net worth in the land ownership.
On the other hand, most Culpeper County residents probably would enjoy significant areas of open space. Open space, especially open space maintained without county expense, is a big benefit to members of the community. Most open space in Culpeper County is farmland.
Most farmland is owned by investors. Even farmers that own large amounts of land are primarily investors, and they realize it. It is impossible to produce row crops or beef cattle and generate enough profits to financially justify land prices above $5,000 per acre. County land use tax rates reflect the tremendous difference in the value of land versus the value of land for its agricultural use. Most land in Culpeper County is now worth more than $10,000 per acre whereas the agricultural value of most land in Culpeper is less than $2,000 per acre. Markets may rise and fall, but the odds are slim to none that Culpeper land values will ever return to agriculturally-supported values.
Therefore, the problem is, “How does Culpeper protect its farmland without economically damaging the investors and farmers that own the land?” Phrased in this manner, it is obvious that any new zoning ordinance must create more value for open land than it destroys.
Land Valuation Drivers
Open land in Culpeper County is valued based upon three factors:
- Subdivision rights (the number of lots that can be created out of the land)
A subdivision right in Culpeper County is worth more than $30,000. The county requires $30,000 per lot for rezoning proffers. Further, at $50,000 per right, there are many willing buyers of rights in RA and A-1 areas.
- Acreage (quality and quantity)
Acreage with no incremental building rights and no further potential uses is still worth $2,500-$10,000 per acre in Culpeper County depending upon the location, topography, views, and adjoining landowners.
- Potential future uses of the land
Land zoned A-1 near land zoned C-1 or R-1 is worth more than land zoned A-1 surrounded by other A-1 land and not near public utilities or good county roads. The reason for the pricing disparity is that buyers consider potential uses of land when they purchase. A-1 zoned land very near Culpeper Town trades at much more than $10,000 per acre and $50,000 per building right because buyers exist that will speculate on other uses or will actually work to try to rezone the land.
County government cannot positively impact the value of acreage by means other than removing restrictions or burdens that previously negatively impacted the value of acreage. County government can, however, negatively impact the value of acreage by increase taxes, increasing regulations, restricting uses and other means.
The speculative nature of markets and real prospects for rezoning through growth affect the differences in valuation based upon the potential change in use of parcels.
The most direct and easiest method by which the county affects the value of one parcel of land versus another is subdivision rights. In Culpeper, every usable subdivision right (or building lot right) adds more than $30,000 to the value of the parcel.
Subdivision rights have become so valuable that landowners cannot ignore them. Even long-time landowners that have historically not subdivided are aware that they could “break-off” two lots from their farm and sell each lot for more than $150,000. Other farmers have realized that they can divide their farm into three parcels and then divide each of the three parcels into three parcels in five years for a total of nine parcels. Recently, LLC’s have been formed to buy Culpeper County farms and subdivide them a total of three times over a ten year period. Plans for the three subdivisions exist, and investors have a vested interest in the rights availed them under the current Culpeper County zoning and subdivision codes.
Even more sophisticated plans already have contracts or options in place for lots to be created in the distant future. Others call for the distribution of the property to a number of owners equal to the number of subdivision rights available ten years from now.
The importance of such plans is that some landowners are working with well-qualified and competent counsel to protect their interests under existing ordinances. They do so because the wish to protect themselves from any changes to county ordinances that adversely affect their land value.
In order to affect a smooth change to the county ordinances that does not upset no-growth or smart-growth groups and does not upset farmers, developers, builders, and investors (the terms are not mutually exclusive), Culpeper County will need to entertain an approach that answers to each of the constituencies in addition to improving land use and quality of life for Culpeper County citizens.
Therefore, noting the value of a division right and noting that many owners are aware and have a desire to protect the value of their division rights, Culpeper County likely would have a challenge engineering a downzoning. Further, noting that minor subdivisions are administrative, any attempt at a downzoning would likely lead to massive amounts of subdivision in front of the downzoning, further removing a significant amount of Culpeper’s farmland in its most scenic parts of the county.
Speaking, personally, the author of this article owns 433 acres in more than 12 parcels that could be administratively divided into between 30 and 40 parcels by right. The 433 acre farm is located along the west side of Reva Road from Hwy 29 to Duncan Trail. While current plans are to hold the farm for a very long time and to not subdivide, a down-zoning would force subdivision, which would cost the owner approximately $80,000. If the owner were required to build private drives into his fields as a part of subdivision, costs would be approximately $200,000. Still, at a value of $50,000 per incremental parcel in Reva, the 20 extra parcels would be worth $1 million, an amount to large to ignore.
The owner knows of more than 1,000 acres in more than 15 parcels that would also execute plans to subdivide upon any proposed downzoning. Further, it would seem logical that a large percentage of owners of parcels 15-50 acres in size would immediately begin subdivision efforts in a down-zoning were proposed. Therefore, even if a downzoning were achieved, much of the intended consequence would not occur, and many beautiful farms would be lost in the process because of economic considerations.
Our experience as sellers of undeveloped land has taught us that most land purchasers in western Culpeper County are looking for either an investment or a building site. There is very limited demand, if any, by people wishing to own farms in western Culpeper County. It is likely that Underwood Farms will be the last significant beef cattle operation to buy land and initiate a farm in western Culpeper County. Underwood Farms began its operations in 2000, when land could be purchased for $2,500 per acre, and agricultural use could be justified and anticipated as a significant source of profits. Buyers of land today at more than $8,000 per acre have to anticipate land price appreciation as the source of returns because at 1 cow per 1.5 acres and a beef cow generating a profit of $150 per year under good conditions, cattle profits are minor relative to land costs and interest payments.
Therefore, the solution that protects farmland while protecting landowner value at no extra cost to Culpeper tax payers has to be relatively density-neutral, meaning that the total number of building rights available by-right administratively over the next few years needs to be relatively unchanged.
So how does the county slow down the division of farmland into 3-20 acre parcels while protecting landowner value and Culpeper taxpayers? The solution is to fix the number of building lot rights and then make the allowable size of the lots to be less than 3, 5, or 10 acres. Therefore, in the example of the author’s 433 acres in Reva that currently has 30-40 building rights, the owner could sell-off 30-40 1.2 acre lots and maintain a 400 acre farm that could not be subdivided. With the increased desity, a high quality product could be developed, something akin to a Rillhurst that would have even greater value than a Rillhurst since it would be protected by a 400 acre buffer.
Even better, if the author of this article did not want to use his 30-40 division rights (he doesn’t unless forced to economically), allowing him to sell those division rights to land-owners that wanted to turn a 5 acre parcel into four 1.2 acre parcels would benefit everyone. Density would increase on non-farmland where there was sufficient demand for building lots that a $30,000+ value of a parcel could be met. Finally, if revenue were available and public support existed, the county could purchase exist building rights and hold them in inventory. This thought process is behind the proposal for the new RA-1 zoning.