Muddled in the Midwest
SAN FRANCISCO—Wouldn't it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers' questions.
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Dear Ms. Real Estate:
I own significant acreage (20+ acres) in a Midwest community (population 400,000) that has suffered a decrease in the size of its population. What type of use/uses should I be looking for?
—Muddled in the Midwest
Dear Muddled in the Midwest:
Face it, until the city gets through “right sizing” or finds a way to reinvent its economic base, there are few financially feasible development options. What to do until that time comes?
Select your best holding option. Ms. Real Estate suggests you consider turning the 20 acres into an urban organic farm. If your property is not too distant from the population base, you should also consider setting up a fresh produce delivery company to furnish fresh produce on a weekly basis to those residents who sign up for weekly deliveries.
Since your “interim use” might be long lived, begin to investigate whether the city will grant a property tax reduction if your site is converted to an urban farm use. For example, in September 2013, Governor Jerry Brown of California approved state legislation that permits cities and counties to create Urban Agriculture Incentive Zones. The legislation permits those landowners who dedicate their property to agricultural uses to have their property taxes reduced. The only caveat is the property has to be kept in agricultural use for five years.
Even should you not be able to obtain a property tax deduction, urban farming sounds like an ideal use for your site. Should the economy of your city pick up sometime in the future, you will have the option of switching to a higher value use without tear-down costs at minimal cost. And remember, “organic” is likely to make a hero of you, Mr. Developer.