02/16/12 — Looking at cost vs. gain for land

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Looking at cost vs. gain for land

By Steve Herring
Published in News on February 16, 2012 1:46 PM

Residential development might be attractive because of the money it pumps into the county, but a recent study found that for each $1 of revenue generated, it costs Wayne County $1.24 to provide community services to development uses, while each $1 generated by commercial and farmland costs the county 34 cents and 47 cents respectively.

Put another way: 70 percent of the county's revenue in fiscal year 2010 was generated by residential land uses, 23 percent by commercial land uses and 7 percent by farmland.

However, 89 percent of county expenditures went to provide community services for residential land uses compared to 8 percent for commercial and three percent for farmland.

Those were among the findings of a Cost of Community Services study presented to county commissioners earlier this week during their planning retreat. The study, conducted by staff at Mount Olive College, was funded through the Military Growth Task Force.

"While residential development contributes the largest amount of revenue, $64 million, its net impact is negative, a deficit of $15.4 million," said Dr. Kathy Best, of the college's Tillman School of Business. "The other two land categories generated surpluses of $13.8 million from commercial and $3.3 million from farmland."

Mrs. Best explained that for the study the county's revenues and expenditures were divided into three categories -- residential, commercial and agriculture.

She said the study shows that the county spent $79.4 million to provide community services for residential use.

It also shows that commercial use generated $21 million in revenue, but required only $7.2 million in expenditures for services while farmland generated $6.2 million while requiring only $2.9 million for services.

Farmland and commercial property generated significant revenue from property taxes as well as state and federal grants to offset the loss created by residential development, she said.

"So what is a Cost of Community Services study?" she said. "Basically it is a case study approach that is used to determine an individual community's public service costs versus revenues based on current land use -- specifically residential, commercial/industrial and agriculture/forest."

The study is based on the county's 2009-10 comprehensive annual financial report and used the actual revenues and expenditures for 2009-10.

"Why take the time to do the study? To make a case for farmland and agriculture," she said.

The local study did just that, she said.

Agricultural lands are more commonly converted to development than any other type of land, mainly because it tends to be flat, well-drained and has few limitations to development, she said. It can be more affordable, too.

Wayne County Cooperative Extension Service Director Kevin Johnson reminded commissioners that the county several years ago conducted a farmland preservation plan. A long-range land use plan, one of the things it called for was a Cost of Community Service study, he said.

"Wayne County has been very pro-active and was the first county east of Interstate 95 to conduct a farmland preservation study," Johnson said. "Wayne also is the first county east of Interstate 95 to do a Cost of Services study.

"This is going to show the value of keeping farmland, preserving farmland. It also shows the value of having industry."

Dr. Sandra Maddox, director of the MOC Agribusiness Center and assistant professor of science education, said she thinks the study speaks to the visionary leadership in the county.

"You are facing growth based on transportation infrastructure that has already occurred and some that is proposed to occur," she said. "You are looking at population growth. I admire the leadership here in Wayne County who, No. 1, understands the importance of agriculture in the economy in Wayne County."