Cost of Community Services

The American Farmland Trust developed Cost of Community Services (COCS) studies in the mid-1980s to provide communities with a tool to measure the contribution to the local tax base of lands zoned for agricultural, commercial and residential. The studies are used to determine the fiscal contribution of existing local lands uses. COCS studies conducted over the last 20 years show working lands generate more public revenues than they receive back in public services.

More than 100 COCS studies conducted between 1989-2003 shows distinctive differences of median cost to provide public services to different land uses. Working lands and open space require $0.36 of public services for every dollar of revenue raised. Whereas residential lands require $1.15 of services for every dollar of revenue raised.

Proposition 13, passed in 1978, essentially caps the amount property taxes can increase annually. The law has kept property taxes lower, but also has decreased the operating budgets of county and city budgets. In response to this decrease in funds, many counties and cities have actively promoted commercial and residential development to boost their tax base. However, the COCS studies show that this development is counterproductive to long-term operating budgets. Working lands and open space may generate less revenue than residential or commercial properties, but they require less publicly maintained infrastructure and services.

In every community study, farmland has generated a fiscal surplus to help offset the shortfall created by residential demand for public services. This is true even when the land is assessed at its current agricultural use. Converting agricultural land to residential land use should not be seen as a way to balance local budgets.

Case Study

Agricultural economists from Colorado State University and the University of Wyoming conducted a study that estimates Colorado counties pay $1.65 in services to former agriculture lands converted to ranchettes for every dollar they receive in taxes. More road maintenance and longer routes for school buses accounted for much of this disparity, but costs from fire and police protection, water lines and electricity also contribute. According to the study, the estimate is conservative because the authors chose not to assign contingent values for associated public good values such as diminished wildlife habitat, diminished water quality and increased air pollution.

This study recommends encouraging agricultural land protection as a manner of preserving fiscal funds and capitalizing on the accrued savings of providing services to higher density developments. While partially substantiating COCS studies, the study cautions against simply using COCS ratios without accounting for specific service-based factors such as development from public service nodes, development density, and composition of developing rural households as well as the natural resource land base.