I'm really late in posting this, but I saw it and immediately thought about it in relation to a discussion we had on here recently:
An auction to benefit the Charles W. Christie Foundation raised nearly a record price per acre for Champaign County farmland – but not quite.
Dr. Adolf Lo and his wife, Renee, successfully bid $32,000 an acre for 61.7 acres northwest of Champaign. The land is on the southeast corner of U.S. 150 and Duncan Road – directly south of the Rockwell Automation and Midwest Underground Technology plants and not far from the Interstate 57/Interstate 74 interchange.
Discuss.
IP--
I read this on Sat., too. Although I felt my jaw dropping, it really didn't surprise me. Dr. and Mrs. Lo have been buying up prime farmland in Champaign County for decades. The last few years especially, the prices have been bid up at a dizzying rate--for both farmland and, of course, downtown Champaign. While I would like to view this as progress, I believe most of it is speculative in nature between a few local power players. These players have effectively shut out and outbid many new entrepreneurs (hey, weren't entrepreneurs the original "creative class"?).
The discussion from 6/26/08 discussed this. Many of those who posted, including myself, touched on this in regards to downtown development being in the hands of a few. The same applies to farmland being bid up under the auspices of new retail zoning--the bigger, better strip mall.
http://www.illinipundit.com/2008/06/26/open-thread-6262008
that cannot be a "farmland" price, that is price for development land that is currently being farmed.
Champaign wants the 150 corridor developed - might turn out that this is an absolute bargain price
The Illinois property tax system provides a strong impetus to real estate speculation in farmland. Although the fair market value of this land is apparently about $32,000 per acre or $2,000,000, the taxes the Lo's will pay will be based on its farmland assessment of $14,780. That is just 2% of the 1/3 of fair market value that applies to non-farm businesses or your house. The total annual tax bill for this tract will be about $869.
My impression is that the lower assessment for farmland is an incentive to keep it farmland. If the farmland is right on the edge of a developed area, it may be expensive, and you may be able to develop it one day, but it's still a cheaper tax bill to keep farming it. After all, if the assessment rate was a spur to develop the land, then all of downstate Illinois would developed to the level that Chicago and its suburbs are. As for it being a spur to speculate, I think that adjacent development is the real incentive at work here. No one pays prices like those mentioned for a parcel between Pesotum and Villa Grove, but it makes sense if it's right next to the westernmost development in Champaign.
"Champaign wants the 150 corridor developed" as does Mahomet since the next I-74 interchange will be there - it makes sense.
Why should any particular piece of land remain in a specific use? This substantial tax preference for farming imposes a significant distortion on the market for developable land. That drives up raw land costs and becomes a hidden tax on young families seeking to buy homes. You may be comfortable with transferring wealth from working families trying to buy and keep their first house to farmers but I am not. Farmers by the way, last time I checked have median incomes above those of typical working families.
As for all of downstate Illinois being developed - well what can I say - property taxes don't determine job creation nor do they have an impact on the decision to have children. Development will proceed only as far and as fast as economic and population growth. On that basis there is not much chance of the bulk of Illinois being suburbanized.
In case the cynics among you are wondering, I am not now nor have I ever been a member of National Home Builders Association, nor am I in any way employed by the real estate development or home building industries.
I just don't like taking money from those who have less of it to give to those who have more. Like the Lo's need a tax subsidy! I don't understand why progressives aren't furious about this.
And, oh by the way, this also increases your property taxes. As if you don't give enough to farmers on April 15.
I just returned from the Dallas-Fort Worth metro area where houses and shopping centers grow over night in big open spaces with no landscape or geographic restrictions and are bounded by highways that create an immediate lack of connectivity. I know this is happening there, but to visually see it reminds me how important it is for a community to consider aspects of sprawl--costs to the community, energy use, loss of the best farmland in the USA and one of three globally, and what in the world will communities do with these mega-sized McMansions in 20-30 years when these people realize how much it costs to maintain when we can not save the historic mansions in the center of cities.
Another observation of an area of a state that has virtually no trees and those that do exist can not reach any great heights due to the type of soil. I looked at all of those roof surface, full sun, and mentally calculated how much energy could be generated via solar panels, solar rooves, domestic wind turbines to run the A/C that goes 24/7 9-10 months of the year. Along with nary a tree in any parking lot to reduce the pollution that is created by the sun beating down on the cars. During my visit, there were tremendous rain storms. The civil engineering to move water off the land as quickly as possible is an engineering feat. Not one bioswale in sight/on site.
Pattsi Petrie