Real Estate

The unintended consequences too much regulation

By From page C3 | April 16, 2012

My first land development was pretty easy. Two buddies and I purchased 100 acres of grazing land from an old rancher back in the 70s. We hired a surveyor who divided (paper platted) the property into four equal parcels. Then we filed the new plat map with the Recorder’s Office and received four new parcel numbers. We then sold the individual parcels to folks who wanted to move to the country and they built their new homes. Everyone ended up in a better position. Even the county gained with the increased property tax revenue.

Subdividing land today is not such a simple process. A simple parcel split may take years to complete, cost thousands of dollars and, after meeting all the county’s requirements, may still be declined by the El Dorado County Board of Supervisors. Today, individual property rights are subjugated to a number of environmental factors. The difficulty and expense of subdividing or developing property in our county is legendary.

Individual property rights aside, an argument can be made for prohibiting any new development in the county. Why should we allow some developer to build new homes when we have plenty of vacant ones already? Didn’t we move here because of the rural character of the county? Why should we change that? New development will create traffic congestion, neighboring wells will go dry and clear-cutting the forest will destroy our wildlife. NIMBY (not in my backyard) has been the prevailing attitude among neighborhoods and community councils reviewing any new development proposals. We all support jobs and economic development unless it is proposed in our neighborhood.

The decline in market values has stopped many new developments from moving forward. The expense of engineering, environmental studies, mitigation fees and required on-site and off-site improvements can easily exceed the market value for a finished lot. Over the last 6 months the median selling price of a vacant residential lot closing escrow has been $67,000. That’s less than what it would cost today to develop those lots not considering any land cost.

One of the obstacles facing proposed land or retail development is the uncertainty that the final decision will be made based upon a project’s popularity rather than on its merits. A developer may meet all the county’s requirements and still be denied by the Board of Supervisors. I recently sat through a board hearing on a proposed small rural land development. County staff testified that the developer had mitigated every issue and satisfied every condition. It was the Planning Commission recommendation that the project be approved. The project was denied. Board members cited neighborhood testimony against the project as one of the reason for turning down the request. The property owner had spent five years and nearly a quarter million dollars complying with every county requirement.

The time and expense of splitting a property into more saleable parts will be an increasing problem for many large land owners in our county.

“It’s too big to sell in one piece and I can’t afford to split it up. What do you suppose I do with it?”

He was a second-generation apple farmer in Camino. In poor health, he needed to make some decisions on what was to happen to his property after he was gone. He had been trying to sell the place for more than a year but the parcel was too large for any buyers. None of his family wanted to work the farm. Farming was granddad’s lifestyle not theirs. The decision as to what to do with the property and old house was already causing tension among the siblings who had different ideas as to what should happen with it. If he couldn’t find a buyer for the whole parcel, his children would inherit the property and likely sell it off quickly at whatever price they could get.

A parcel spit would simplify the inheritance issue. Each one of the three adult children would receive a parcel of land allowing them to decide for themselves if they wanted to keep the property, lease it or sell it. Subdividing would make the property easier to sell and for a higher price but that would take considerable time and money, neither of which he had. His life’s work would likely rot on the trees and be sold off quickly after he was gone.

We all can agree the negative impacts of development should be reasonably mitigated, if possible. But at what costs is often the subject of much discussion. County impact and mitigation fees for new residential construction now exceed what many folks are paying for a home. Last month 24 homes closed escrow for less than a $100,000 selling price. Of those 24 homes, half sold for less than what the fees would be to build the homes new.

By design or unintended consequences, our past efforts to maintain our pristine lifestyle may have ratcheted down too tightly on builders and developers. Fortunately, the current Board of Supervisors recognizes that some changes need to be made. At their direction, regularity reform and impact fees are being addressed. It’s a formidable effort likely to face stiff opposition by the NIMBY crowd. It is about time for a little more common sense and less regulations.

Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his website

Ken Calhoon

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