Sep 042006
 

Land banking The concept of land banking for Union County Public Schools shouldn’t be as tough a sell as it seems. Almost every commissioner and school board candidate running for office this year, has voiced some measure of support for the idea.

Forecast future school construction needs, years in advance and purchase property at todays prices, rather than tomorrows market inflated price.

Then as growth presents the need — build, all the while saving the taxpayers money and reducing distasteful land condemnations.

Brick and mortar schools, playgrounds and ball fields occupied with children not mobile classrooms and a learning environment that affords our children media centers, computer rooms and cafeterias without the crush of trailer fed over-crowding, this is your right — your children’s’ right.

We should view the recent bond vote by the commissioners as a anomaly. The initial proposal of a $25 million land banking fund advocated by the school administration was negotiated down to $10 million, but ultimately cut completely from the final school bond. Very regrettable, but there are other options.

Commissioner’s Sexton, Lane and Stone have an excellent record of supporting the school budget and bond needs. Commissioner Pressley’s record on the school budget and condemnation requests needs work, but recently he has voiced greater support for the school systems requirements. A good sign, but actions will show more.

Following is a word chart that shows how simple math proves the wisdom of land banking.

LAND BANKING of $10,000,000

LAND PURCHASE

Land has been appreciating at the rate of roughly at a rate of  25–30% annually.

25% first year return on $10,000,000 =

$2,500,000

First Year appreciated value=

$12,500.00

25% price appreciation – 9% debt service=

16%  or a  $1,600,000 reduction to the taxpayer on school land purchase.

BOND DEBT

$10,000,000 divided by 20 years =

$500,000

10,000,000 X 4% (interest) =

$400,000

First year payment

$900,000

SAVINGS

Appreciation @ 25% for 3 years =

$9,531,250.00

Minus cost of 3 years debt  =

($2,640,000.00)

reduced cost to the Union County taxpayers

$6,891,250.00

The savings in 3 years would be like getting a high school site for free.

Note: The figures reflect historical values in western Union County. As an example, the School Board purchased 32 acres of land in Wesley Chapel in July for approximately $75,000 per acre. This same parcel of land was last sold in 2004 for $32000 per acre. More than doubling in value in 2 years.

The Board of County Commissioners should establish a ‘Land Banking Fund’ that would allow the School Board to proactively seek and purchase property, without running a political gauntlet or telegraphing their intents to land speculators waiting to swoop on the often times slow footed school system. It’s time, Union County taxpayers got a break!

Supporting Land Banking is a ‘No Brainer!’

Postscript:
Last night(1), the board of county commissioners, led by Richard Stone, voted to provide $25 million in ‘Land Banking’ funds to Union County Schools. Highlighting the issues of over-crowded schools and the ever escalating cost of land acquisition, the board supported the measure by a 3-2 vote.

A disappointing no vote came from Commissioner Pressley, who just a week ago during the school bond saga, voiced a modicum of support for ‘Land Banking’.

In considering the measure proposed last night, Mr. Pressley objected to how funds were going to be financed, arguing for other methods, including developer land donations and the recent state enacted lease back provision for school construction.

The optional methods of school site procurement suggested by Mr. Pressley are valid ideas and should be vigorously pursued to supplement, but not in lieu of concrete ‘Land Banking’ efforts.

I applaud the action taken by Commissioners Lane, Stone and Sexton. The Land Banking Fund will for the first time, place the school administration on a level playing field with land speculators and provide a valuable tool to proactively build the schools our children need.

  1. Sep. 5, 2006 []

Facebook Comments

comments

  3 Responses to “Land Banking — Isn’t it time Union Schools got ahead of the curb?”

  1. Mark, I agree with your logic to a point. The future value of land in Union County as well as new schools is dependant on growth in housing. Housing values are expected to go down 10 to 12% in the next two years. We have experienced a huge jump in land values in the last decade because we have doubled population in the sam period. To assume the same percentage increase in the next ten years we would have to assume the same population growth (double) in the next decade, making our population in 2016 about 350,000. I haven’t seen any estimate of growth that size and with property values decreasing I can not forsee and influx of buyers who bring their equity checks from their last home to put down on their next home. Land banking has it’s risk. What do you do when the land you bank is not where the growth happens?

  2. John: Can you cite your source regarding the decrease in housing values over the next two years? Over the past 10-20 years, the greater Charlotte area has been immune to the market forces affecting many other areas of the country.

    That was true back in 2000-2001 when property values slumped in many areas of the US, but not Union County. Recently, a local group of economists reported that they expect our 7-county economy to gain in strength due to the great diversity of industries in the area and the number of people moving here particularly from Ohio and New York. Where is Union County’s growth going to happen? I think that is obvious – with CMS schools being a morass and the Mecklenburg property tax rate being twice Union County’s, suburbanites will continue to move to Union County right along the same areas they have been doing so for the past 10+ years.

    There is no mystery here. With land banking, all you need to ask is the following: if you had taken a $1 in 1996 and invested it in Union County land or invested it in the U.S. stock market which would have been a better investment? History is no predictor of the future as far as investments are concerned, but unless you take a flyer on China’s or India’s stock markets and take a lot of risk with it, Union County is where I would put my money. As always, John, I appreciate your thoughts.

  3. Jeff, Fox News did a story on land values on Sunday and they are my source. The story should be available on foxnews.com although sever other news channels did a similar story. Original source was a realtors group survey, but I do not remember the groups name. Also the growth cited in the most optimistic US Census report is 300,000 in the 2020. I do not personally predict the future, if I could I’d be a very rich man on wall st.

    As to where growth will happen, we can predict a small portion by locating where the building permits have been issued but water and sewer issue will probably hold back most east Union County developement for many years. You must remember trhat land purchased by the county or state is tax exempt (like the bypass right of way bought in 1996) and produces no tax revenue for the schools, reducing the amount of money we have to work with to solve school problems. With the passage of the land banking $25,000,000 deal last knight, my opinion does not seem to matter.

    Personally, I do not invest in US land for a number of reasons. One of the biggest is that land in the U.S. cannot ever be truly mine, it is taxed every year. As land passes fromgeneration to generation, we must pay about 50% of its value in “death” taxes. Other countries do not have such an abusive tax system and offer far greater ROI if one is inclined toward land investing. Much of the profit in Union County land in the last two decades has come by way of changing the lands use, I.E. farms to housing. The reasons people move to Union County are many and lifestyle is one of them. Have you thought of the changes since you moved here? It is getting harder to take a ride in the country because “the country” gets farther away each day! Cities often have houses on 10,000 sqare foot lots and county lots are 40,000 square feet. With the creation of the various municipalities (who control their own zoning) these 10,000 square foot lots are popping up all over the county and our taxes will continue to rise because we are building much more expensive homes. This, of course, will make fewer and fewer people able to buy in Union County. Appreciate the last comment!

Sorry, the comment form is closed at this time.