The Rezone Impact: Developers Should Pay for Increased Profit Opportunity

Matthew Petryni is a recent graduate of Sehome High School and will be attending the University of Oregon in the fall. He has lived in Bellingham since 1996.

There’s a common misconception among the (few) local conservatives and Building Industry Association (BIA) operatives that all of the other locals are essentially against the idea of density, or even moreover, against the idea of growth. Many of us may be.

However, often overlooked in their insatiable need to build, the BIA and its members often don’t realize that the opposition turning out to shut down building in the Hundred Acre Wood, or those at the Samish Ridge rezone meeting on June 28, have no problem with growth or density. Speaking at least for myself, I would like to see it managed and done properly, not become the moment everything we love was destroyed.

In city after city, certain conditions, be it the environment or the town character, have lifted them to the top of the “best place to live” lists that are so maliciously published. Then, virtually without variation in city after city, the resulting spike in demand has led to a spike in growth, sprawling those cities outward into the woods, farmlands, wetlands with suburban cul-de-sac layouts, complete with wide, unfriendly streets and prefabricated homes dominated by a garage with a dwelling unit that hardly faces the street. This is happening in Bellingham, slowly, and surely. And it’s time for this to stop.

Simply speaking, the Samish Ridge rezone is unnecessary. Having high density zoning on the edge of a city is absurd. Again, I have no problem with high density, so long as it is centralized, logical and placed amongst mixed uses and multiple modes of transportation.

The main problem with such rezoning is that it gives wealthy developers the capability of increased buildout—in the middle of nowhere. Rezones can as much as quadruple the number of dwelling units, a free gift with no cost to the developer. In this way, it’s better to purchase a small, cheap parcel of land, say on Bakerview Road or Samish Ridge, and then have its density increased so you can build more on it.

Doing this also ignores the tremendous impact this density has on its neighborhood, which, until the rezone, is often mostly suburban or rural, and not currently planned for growth of this size. Therefore, I suggest that developers merely pay for this increased profit opportunity.

Instead of simply sweeping through inappropriate rezones at the request of developers, the city should require these developers to refund the windfall they receive from this process. When a parcel of land is rezoned to a higher density, its value is significantly increased. Having the ability to sell four times as many houses means the ability to make nearly four times as much profit. Therefore, if the developers were to have purchased the land after it was rezoned, they undoubtedly would have had to pay substantially more for it.

All I ask is that this difference, the dollar amount of increase in land value between an appraisal before the rezone and an appraisal afterward, should be paid to the city in the form of a “rezone charge.” For instance, say a parcel of 100 acres is purchased by the developer for $2 million, or $20,000 per acre. This parcel, at its current zoning, is capable of supporting 220 dwelling units, typically single-family houses at 2.2 units to the acre based on density of 20,000 square feet per unit (SFU).

After the rezone to 5,000 SFU, this level becomes 8.8 units to the acre, now allowing the construction of as many as 880 homes. Because this rezone increases the buildout by 660 homes, this simple process would cause the value of this parcel of land to skyrocket. I’m not an appraiser and I cannot say by exactly how much, but I do know that if density increases by 400 percent, the underlying value of the land will likely more than double.

With the “rezone charge,” the amount the developer made solely from the rezone would be paid back to the Citizens of Subdued Excitement upon whom this density will have a permanent adverse effect. The city could allocate this rezone charge between emergency services, the public works department and transit authority, so to provide increased traffic mitigation for a growing city, and the Bellingham Housing Authority, whose receipt of such funds would help the city provide affordable housing.

The housing authority, which actually has the responsibility of building affordable housing (developers have the responsibility to make money), could then be able to offset the soaring housing prices resulting from the craze of real estate speculation. The specifics of the rezone charge distribution could be worked out later. In essence, as a community, we need to do more to get developers to acknowledge the massive amount of money that is made from simple procedures, such as that of rezoning.

While I am not familiar with the entire history of rezoning, it would be hard to imagine that rezones were intended to be the substantial windfall to developers on the backs of residents that they have become. It is time for this gift giving to end. As a city, we can no longer afford to offer our land and our quality of life up for slaughter. §