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Market effects of conditional overlays

Linden Smith

The effect should be negligible.

First, any value assumed under a different use is merely speculative, and an appraised value is based upon the fair market, not the speculative market.

Second, appropriate restrictions that relate to the sites' ability to sustain a particular use cannot be seen to detract from the value since the site did not have that as an intrinsic value in the first place. For example, if we rezone a 2 acre parcel to commercial use but restrict it from having a circus or carnival because the site is too small to have a circus without impacting the neighborhood around it, then we are not curbing the value of the site, we are protecting the surrounding property value, which impacts the property value of the subject property.

Third, any type of conditional zoning restrictions can be appealed by requesting a zone change hearing to amend the conditions.

Finally, land use does not occur in a vacuum. Any use will somehow impact the system as a whole. Uses that derive a higher value on the market can be seen to have a greater impact on the system, and therefore any increased value is merely "borrowing" from the whole.

Oregon has gotten themselves into a real mess by saying that value should be considered in land use regulation. The problem is, that is not a one way street. It would be possible to set up a system based entirely on adding and subtracting value/obligation, but it would be hideously complex and probably unsustainable due to constant challenge.

Mark Walters

Does anybody know of any studies or have any information about the property valuation effects of a conditional overlay as it relates to commercial properties. For example, in our Neighborhood Planning Program, recommendations are often made to restrict neighborhood unfriendly permitted uses on commercially zoned properties, such as agricultural sales and services, limited warehousing and distribution, kennels, construction sales and services, etc. Some property owners have real concerns about the financial effects on their property.
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Jerry Weitz

You will probably need to search through professional appraisal journals, or something similar like Land Economics, to find studies of this sort. Jerry Weitz