I’ve said before that I don’t think “selling federal lands” is going anywhere. Nevertheless, the topic has drawn attention to the plight of some western communities (specifically) with regard to affordable housing. Chelsea Pennick’s recent post on her All Things Public Substack is a case in point. It’s worth reading in its entirety, and I’ll just excerpt a few paragraphs:
If you’ve read the Senate ENR’s bill text or my summary, you know that the purported motivation for selling off public lands is to enable housing development or provide infrastructure needed to create more housing.
Housing and housing affordability are challenges in Idaho, as in most western States. Idaho ranks among the top 5 states in the country with the largest affordability gap, where middle-income earners can afford the fewer than 12 percent of the houses on the market. Most analysts agree that more houses need to be built to reduce the affordability gap. But where and how these houses are built, and for whom, matter.
Danya Rumore, founder and co-director of the Gateway and Natural Amenity Region Initiative at Utah State University, explained why in a piece in High Country News last year:
In scenic places like Vail, Colorado or Bozeman, Montana, often referred to as “gateway” communities, Rumore said that increasing the housing supply doesn’t necessarily result in affordability. “If you build more housing and your community is a very popular place to visit, then often that housing gets consumed by short-term rentals” or second homes, she explained. Unless new projects are “very carefully protected for the local workforce,” Rumore fears they won’t make a dent in the housing crisis.
Looking to federal lands to help ease the housing crisis brings its own set of complications. First, most federal lands are located far from urban or town centers. And in much of the West, these lands tend to be mountainous and not suitable for development. Second, even in cases where they are located closer to cities or towns, they likely do not have access to basic infrastructure like water and sewer, the cost of which is placed on local governments and tax payers. Such development would also expand the wildland urban interface, increasing the resources necessary to mitigate and/or respond to wildfire threats.
The high cost of developing such parcels increases the likelihood that they will be sold to wealthy purchasers that can afford to foot the bill for such infrastructure, leading some to call these legislative proposals “McMansion Subsidy Acts”.
And lest you argue that attracting wealthy landowners might benefit rural economies, research across the West on amenity migration has shown that the increased demand for community services like fire suppression, safety, road maintenance, etc. associated with new residential development often surpass any increase in property tax receipts, placing greater burdens on the tax base while reducing federal payments to public lands counties.
I am curious as to why if that is the case, why communities don’t appropriately charge new residential development? Also why would more development reduce federal payments (which federal payments exactly?). So amenity migration has downsides currently.
Then if more homes are built, amenity migrants and others buy them for short-term rentals. Either way, it could happen that local people and workers are priced out of housing. Of course, this happens in other areas when housing costs increase as well. So amenity migrants, second home owners, and short-term rentals have cumulative impacts. But it’s not just the US nor even the western US, as we have seen in the recent tourism protests in Europe. According to the Guardian:
For the most part, protesters are calling for a total overhaul of a model of tourism that, they argue, drives up housing costs, harms the environment and creates low-paid, unstable jobs – while concentrating profits in the hands of a few.
When I read Justin Farrell’s book Billionaire Wilderness, I wondered why workers put up with the bad housing conditions, long dangerous snowy drives, and didn’t just leave for other areas. Especially folks who had immigrated from another country in the first place. Then, I guess the community would be forced to do something about housing or raise workers’ pay or both. It would be interesting to round up what communities have done to deal with this, especially successful interventions.
“Also why would more development reduce federal payments (which federal payments exactly?).” — Danya may be referring to the revenue sharing and PILT payments that forest host counties and communities receive each year. A reduction in federal land receipts, such as harvestable timber (assuming the land sold would also be acres more accessible/buildable and therefore harvestable), would reduce the payments to schools and communities. Reduced federal acres would decrease PILT formula payments to counties. That said, development of those lands would result in them being returned to the local tax rolls, making them more beneficial to the counties/communities/schools than the very small annual payments the federal government shares.
I think one concern may be that some counties simply won’t be willing to tax the newly taxable properties at even the PILT rate. Some county governments are under heavy political pressure to keep property taxes very low.
I agree that counties are under pressure to keep tax rates low – they are already maxed-out in many forest host counties. However, counties/municipalities/schools can’t afford to simply not tax the newly privatized land, and the rest of the property owners can’t bear an additional tax burden. Some counties may offer temporary tax breaks to encourage development of housing, but I think the greater political pressure would be to tax the newly privatized lands, just like other private lands in those counties.
Living in Cody a gateway to Yellowstone, we see the price of housing is out of reach except for the transplants from higher income states. Even dual income health and museum professionals struggle to get out of apartments. BLM, Bureau of Recreation and the Shoshone Forest are adjacent to Cody, but most of the housing in those areas are second homes or larger acreage property. Not low income housing prospects. Senator Lee’s “solution” is not well thought out- it will take greater thought and effort to address affordable housing. Headwater Economics out of Bozeman does a great job on exploring the challenges and solutions to the “amenity trap” in Western communities. This report from 2023 is useful.
https://headwaterseconomics.org/outdoor-recreation/amenity-trap/
Sharon – I suggest you look into what the city council in Hood River, Oregon did a few years ago to rein in short term rentals.
Hood River and nearby communities on the Washington side of the Columbia River have severe housing problems due to the influx of well paid tech industry employees.
As a society, we don’t have a good track record on reducing the impact of gentrification in communities. TBH – I don’t trust that the proposal to sell federal land will actually help with housing shortages. It puts a lot of faith in local elected officials some of whom are good and effective while there are others who are definitely not so.
Sharon said:
“I wondered why workers put up with the bad housing conditions, long dangerous snowy drives, and didn’t just leave for other areas. Especially folks who had immigrated from another country in the first place.”
I suspect that labor is less mobile than classical economics would predict. The Clinton admin attacked the problem of ‘depressed’ (often rural) areas by encouraging people to move to where the jobs were (often the cities). To this end, the admin supported subsidies for education, job training, relocation expenses, &c. Success was mixed, because many workers, especially older ones, have all sorts of reasons to remain where they are, including deep-seated family and cultural ties (remember the joke about retraining cattle guards).
As for recent arrivals to the country, when someone leaves a place to which they’ve only recently arrived, they will often go back to their families, which for many immigrants may not be practicable. Also, I suspect a fair number of people moving to remote areas for work exhaust most of their resources doing so, and will be stuck there until they can earn enough money to move.
What happens in Vegas should stay in Vegas. More to the point, individual legislation was adopted to privatize some federal lands near Las Vegas following research clearly showing that it would be an effective way of addressing a specific problem. No reason that could not be done anywhere else with facts identifying a similar problem and available land. (Is there a list of the communities who said they want this? It feels kind of hypothetical.)
Sharon: “I am curious as to why if that is the case, why communities don’t appropriately charge new residential development?” I assume this is responding to: “research across the West on amenity migration has shown that the increased demand for community services like fire suppression, safety, road maintenance, etc. associated with new residential development often surpass any increase in property tax receipts,” Local governments also have the authority to charge impact fees to developers for the specific purpose of offsetting these kinds of costs. Of course, if keeping housing affordable is a goal, that would work against impact fees that would be passed on to home buyers.
Montana has just modified their property taxing structure to tax properties that are not a primary residence (second homes, often owned by non-locals, maybe used as short-term rentals) at higher rates than primary residences.
It will be interesting to see how Montana’s idea works.. I would guess that Montana would suddenly get many more primary residents.. from which they could collect income tax (does Montana have an income tax?)
Yup.
You are correct that there is a logical problem in the argument that opening up federal lands to housing development will result in more affordable housing. As you note, this is a general problem in many tourism areas. For example, Door County, the upper part of the skinny finger of Wisconsin, is one of the top tourism areas in the Midwest. Much of the housing available for workers has been lost to Airbnb type rentals. There are no federal public lands in the area and a handful of state and county parks. But there is a lot of undeveloped private land. However, this land is not being used by developers for affordable housing. If it is developed, it more likely will be for pricy vacation rentals and homes for well-heeled visitors from Chicago.