Hot real estate market hurts conservation in Washington, Idaho

SPOKANE — There is a 1,000-acre ranch in North Idaho, a mix of timber and cattle lands, that borders a “gem lake” with waters that recharge the Spokane aquifer.

“It’s habitat. It’s water,” said Dave Schaub, executive director of the Inland Northwest Land Conservancy. “According to our analysis, it’s climate-resilient land. It’s some of the more climate-resilient land in our region.”

In other words, it’s the type of property ripe for conservation, but a fevered real estate market means that the ranch, which is not for sale, likely won’t be conserved.

“The asking price of similarly sized somewhat similar land in Kootenai County is shocking,” Schaub said. “I’ve been talking to some major conservation funders that are walking way away from the property based on the price of the land.”

That reality is causing problems for regional and statewide land conservancy efforts, a fact made clear during Spokane County’s latest Conservation Futures Nomination round. The county program, which relies on a voter-approved property tax levy, has acquired nearly 9,000 acres of natural space since 1994. The program accepts property nominations roughly every five years. Once that period closes, the county and public evaluate the lands and rank them. The county then attempts to purchase the top-ranked parcels.

In 2016, the county received 38 nominations. In 2010, 36 nominations. This year, the county received eight.

“We’ve been sort of in this Goldilocks real estate land where there are these beautiful large properties, undeveloped properties close to the urban areas that were pretty affordable to purchase,” said Paul Knowles, the county park planner. “The conservation futures program was really able to have this significant impact on land conservation and recreation in this area. That Goldilocks era appears to be waning.”

Realtor Craig Soehren is a commercial real estate broker who worked on the sale of the 31-acre Sisters of the Holy Names property in 2017 on the Spokane River. That property, which includes 4,500 feet of shoreline, was purchased using county conservation futures money and was one of the “highlight transactions” of his career.

That sale would be more difficult now, although still possible, he said.

There are multiple reasons for that.

First is the simple fact that land costs more money now than it did in 2017. At the same time, revenue from the levy that the program depends on can only grow by 1 percent a year, per state law. Meanwhile, real estate prices have increased by 20 percent or more per year.

“Do the math,” Knowles said.

For each potential property, Spokane County also has two appraisals done. The county then uses those two appraisals to establish a negotiating range, which can’t exceed the higher of the two appraisals. How much the county can pay is capped per the terms of the program.

Private buyers have no such limit.

“What you’re finding now is the market is exceeding where appraisals are coming in at,” Soehren said, “because it’s such a dynamic market.”

Finally, large properties that used to take months or years to sell and tend to be perfect for conservation, for example, large tracts of undeveloped land, are being snapped up.

“People are getting offers on property without it even being listed for sale,” Soehren said.

That makes a slower process, like the county’s, less appealing. The fastest the county can close on a property using the conservation futures program is between 12 and 15 months, Knowles said. Often, it takes longer.

That’s where nonprofit organizations like the Inland Northwest Land Conservancy and the Dishman Hills Conservancy can be useful, Schaub said. Because they are more nimble, they can purchase lands quickly and hold onto them until the county has the funds to take ownership.

Still, cost remains an issue.

“The market for raw land has changed dramatically,” said Jeff Lambert, executive director for the Dishman Hills Conservancy. “Not only has it sped up, but the fair market values are approaching double what they were two or three years ago.”

Those increases mean that regionally beloved natural areas such as Saltese Uplands and Waiki Springs would be impossible to conserve now, Schaub said.

The real estate reality has forced Schaub and others to think more strategically, picking when and where to conserve lands. In some cases, that means choosing not to.

An example is the Rathdrum Prairie.

“The pace of development is so fast there (that) private land conservation can’t make a difference,” Schaub said.

That’s where tax-funded conservation could have more impact. Unlike Washington, Idaho does not have a county conservation futures program.

In recent years, King County has aggressively tried to match real estate price increases, said Jon Snyder, outdoor recreation and economic development adviser for Gov. Jay Inslee.

“Now they have this huge war chest,” he said.

But property tax revenue increases funding Spokane’s conservation futures program are capped per state law. In 2021, the program was funded by a $3.60 per $100,000 of assessed property value in Spokane County, about $2 million a year. That’s despite the fact that in 1994, Spokane County voters approved (in a nonbinding advisory vote) a property tax levy of $6.25 per $100,000 assessed value.

Due to the 2001 voter-approved initiative led by Tim Eyman, however, state law limits property tax revenue from growing more than 1 percent per year. That means as real estate prices in Spokane increase, the county has to decrease the levy rate.

“This is what blows people’s minds,” Knowles said. “The cost of property is increasing, but the real levy rate is going down.”

That lid can be lifted by a local ballot initiative or at the state level, Knowles said.

There is an effort to ask the Legislature to exempt the 14 conservation futures programs across the state from the 1 percent lid, said David Patton, Northwest regional director for the Trust for Public Land. That bill is being sponsored by Rep. Sharon Wylie, a Democrat from Vancouver. The bill would not increase the levy rate, instead leaving the choice up to county governments.

“It’s really important right now more than ever for these programs to be as effective as possible,” Patton said.