SB 4: A Risk for Rural Landowners?

Yesterday, our new Governor signed SB 4 into law, the appropriation of money for federal semiconductor grant applications and a dramatic, though temporary, deregulation of Oregon’s urban growth boundary. I have not been thrilled with this bill. The subsidies look like a waste to me, but the biggest, most promising impact this bill will have on Oregon’s economic growth is the Governor’s ability to exempt land limited to agricultural use from Oregon’s signature land use policy. The part of the bill that has the most incremental effect doesn’t cost anything.

Or does it? Environmental advocates have been downright apoplectic about the cost of lifting the urban growth boundary, but rather than couch their arguments in a humanity vs. the earth perspective, the message has been: this is bad for rural Oregon.

Andy Haugen wrote an opinion piece for the Beaverton Valley Times titled Dangerous Times for Oregon’s Rural Landowners. Reading it, I couldn’t help but notice the absence of any real dangers. Having a semiconductor factory next door is not, itself, a danger. I read that piece waiting for an example of where chips were built across the street from a raspberry farm and suddenly the raspberries weren’t as sweet. I didn’t see any negative externalities in there.

In contrast, OPB published a helpful article on this debate, which did a better job than Haugen did of coming up with some externalities. Yet they were laughably lacking oomph:

• Traffic
• Trespassers
• Opposition to farm noise
• Farmland fragmentation.

None of these are absent from rural Oregon as it is.

Traffic on less developed country roads can already get congested. Traffic is ultimately a ratio of vehicle throughput and infrastructure capacity. An expansion of the urban growth boundary would include an expansion of road capacity. Yet to some extent, traffic is a fact of life that comes with economic development. The cost of foregoing economic growth is likely to exceed the cost of traffic.

Farms in rural Oregon already have a lot of trespassers. Ever hear of cow-tipping? Hunters cross farmland from one forest to another, as do hikers, photographers, mushroom hunters, and country kids like ten-year-old me playing war with plastic guns in the blueberry fields I grew up near. A factory next door doesn’t bring more pedestrians than farms already face. If anything it will likely reduce nearby foot traffic.

Farms are not known for their noise, but loud noises are more effective in scaring birds than scarecrows. Cindy and Chris Hodges told OPB that they are concerned their sonic pest control will clash in an urban setting. That’s merely an issue of zoning. Don’t zone the area to be quiet. Since we’re talking about an expansion of industrial land, high decimals will fit right in.

The concern of farmland fragmentation is more romantic than realistic. This is the idea that when farms are clustered next to each other there is some kind of synergy. Aaron Nichols, who runs a 30-acre vegetable and turkey farm told OPB that, if farms are surrounded by urban growth: “You can’t borrow your neighbor’s tractor and expect them to drive through a bunch of neighborhoods to get to you.” Again, the stock arguments keep referencing housing when we are talking about industrial development, but get real, if surrounded by farms, your neighbor’s tractor cannot trample over his crops to get to your field. In rural Oregon, to whatever extent farmers borrow each other’s equipment, it will generally have to travel on a public road whether inside or outside an urban growth boundary.

The cost of these externalities, traffic, trespassers, noise control, and fragmentation pale in comparison to the cost of denying rural land owners the freedom to develop their land as they choose or to sell to developers as they choose. The price of agricultural land outside Hillsboro, Oregon is $15 thousand per acre. Contrast that with Aligned Data Centers paying $1 million per acre inside the growth boundary. That is a massive opportunity cost imposed on rural landowners in an attempt to make it easier to borrow their neighbor’s tractor.

The existence of that large opportunity cost turns yesterday’s silly argument about golf courses on its head. Representative Anna Scharf (R – Amity) signed on to a left-wing letter to Tina Kotek asking for private golf courses to get considered for industrial development. This kind of Bernie Sanders style reasoning misses an obvious fact: the owners of private golf courses already have the freedom to develop their property as chip factories or sell them to someone that will. The fact that they have not done so implies that the golf course’s current use offers more value to its owners than the opportunity cost. What Rep Scharf is really saying is that she would prefer that the same freedom remain denied to many rural Oregon landowners, like her constituents.

My ears are still open for better arguments for how the expansion of our urban growth boundaries imposes more negative externalities on rural Oregon than the value of the opportunity that our land use laws deny property owners outside Oregon’s urban growth boundaries. If you’ve got a better argument than those discussed here, please pitch it to me on Facebook here, Twitter here, or LinkedIn here.

Eric Shierman lives in Salem and is the author of We were winning when I was there.