DISPATCHES by Hank Kalet: Rising land costs are putting hte pinch on preservation efforts.
By: Hank Kalet
Two Cranbury farmers are considering whether they should continue pursuing preservation under the state’s Farmland Preservation program.
The farmers the Simonson family and Barclays had planned to enter their properties into the state program, but have been approached by residential developers offering significantly more money than they could earn if they sold off their development rights to the state.
This should come as no surprise to anyone, of course, given the remarkable rise in housing values in the region and throughout New Jersey. According to the state Treasury Department, the average home sale price was $268,315 for the fiscal year ending in June, up 15 percent over the previous 12 months.
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A Star-Ledger analysis of state figures pegged the average housing price in Cranbury at $524,974, up 41.2 percent in the last three years. In Jamesburg, the average price jumped 45.9 percent to $187,520; in Monroe, it jumped 34.1 percent to $223,173 and in South Brunswick it jumped 55.8 percent to $289,077.
I’ve watched these housing prices rise up close. My wife and I bought our Kendall Park ranch house in 1991 for about $130,000. When we had it appraised earlier this year, the value was pegged at about $260,000 a figure that already was about a year old.
By the summer, when my brother and his wife started looking for a house, ranches on neighboring blocks were going for between $280,000 and $290,000. And these are 40-plus-year-old houses.
It boggles the mind, really.
The increasing prices are having two effects. One, it encourages turnover in more established neighborhoods as older residents convert their houses into retirement funds by selling them at huge profits. This brings younger families back to older neighborhoods (such as the Mill Lake Manor area in Monroe and Kendall Park and Brunswick Acres in South Brunswick), increases school enrollments and creates the need for additional classroom space a factor driving the referendums in both Monroe and South Brunswick.
Two, the increase in housing prices also is helping boost the price of undeveloped land, creating incentives for developers to buy up what’s left and build as many houses as they can.
What this means, of course, is that towns interested in preserving undeveloped property are going to find their jobs even more difficult than in the past.
Cranbury already is being forced to deal with the sticker shock and other communities could follow. South Brunswick has been considering buying a 102-acre tract on New Road, the last major chunk of property in the Kendall Park area that could be preserved. And there are numerous properties on Monroe’s wish list.
Linda Busch, the county farmland preservation administrator, says Simonson and Barclay do not represent a trend and neither has officially walked away from the offers on the table. Those farms were appraised at $16,200 an acre for the 131-acre Simonson tract and $16,300 an acre for the 88-acre Barclay parcel. In both cases, the preservation awaits only final signatures on contracts.
But, as Carol Applegate, who is acting as spokeswoman for the Simonsons, said in a letter this week, the dramatic increase in land prices in the area makes it difficult not to consider the offers put on the table by development firms.
"In 2001, when the Simonson family unanimously agreed to apply to the farmland preservation program, we indicated our willingness to accept an amount that represented 81 percent of the land’s appraised value," she wrote. "In the following two years, as the farmland preservation process followed its course, property values in the area increased dramatically. It is hard to imagine that any homeowner in Cranbury would sell their home today for a price appraised in 2001."
And that’s the crux. While neither the Cranbury Township Committee nor the Simonson family are willing to divulge what the developer is offering, we can get a pretty good estimate by extrapolating backward from some figures the family was willing to provide. The letter said the family would accept an offer from Cranbury equivalent to 72 percent of what the developers have offered, or about $1 million less than what the developer had put on the table. That would put the developer’s offer at about $3.6 million or about $1.5 million more than the land was appraised at by the county and more than double what the Simonsons originally had agreed to.
This raises questions about other parcels. For instance, South Brunswick received a $9 million appraisal on the 102-acre Kendall Park tract about a year ago. Given what has happened in the past year to housing prices, it seems safe to assume that the property might be worth $12 million or $13 million now (the township has received an updated appraisal, but is not making it public for now).
All three communities have dedicated open space taxes. Cranbury’s rate of 2 cents per $100 of assessed valuation brings in about $133,000 a year, while Monroe’s 1-cent tax brings in about $375,000. South Brunswick has a 4-cent rate, with 3.5 cents going toward preservation and a half-cent going for park development. The 3.5 cents brings in about $1.25 million a year in revenue.
That may seem like a lot of money. But given the spike in land prices, the purchasing value of municipal open space trust funds just can’t be what it was a year ago. Each municipal tax dollar buys less as prices grow; increasing the amount towns raise through taxes might help them keep up with the rising values, but that’s a losing proposition. We appear to be in a cycle in which we will be raising more and more money, but buying fewer and fewer acres.
But that’s the market we live in. If we really are committed to preserving open space and farmland, we need to realize this and understand what that commitment is going to cost.
Hank Kalet is managing editor of the South Brunswick Post and The Cranbury Press. He can be reached via e-mail by clicking here.