Farmland in the seven-county metropolitan area of Minneapolis and St. Paul, Minn. has been urbanized at nearly twice the rate of population growth since 1970, resulting in the loss of more than 150,000 acres, or 235 square miles of farm and vacant land. Since 1980, growth has occurred almost exclusively in the second ring of suburbs and, to a lesser extent, on the urban fringe. Slowing the pace of urban sprawl around the Twin Cities has been hindered in part by the property tax-dependent system of local government finance. Even with a nationally lauded property tax base sharing program and one of the nation’s highest levels of state aid to local government, municipalities compete for new development to increase their tax base.

Across the country, suburban developments are proposed, advocated and approved based on the argument that expanding the tax base will reduce local property taxes. Among other things, this has led property owners to oppose tax relief programs for farmland. In response, American Farmland Trust, a private, nonprofit conservation organization, has developed a consistent, inexpensive and easy-tounderstand way to evaluate existing contributions of municipal land uses. In eight studies in the Northeast and Ohio, AFT has found that any apparent gain in tax revenue from residential
development was lost when the cost of delivering necessary public services — from roads, sewers and parking lots to education and public safety — was considered. Based on these studies and interest in finding out if this pattern would hold in Minnesota, AFT was asked to conduct three Cost of Community Services studies in the Twin Cities metro area.

Cost of Community Services studies reorganize local records to trace the flow of revenues and expenditures generated by specific land uses. Results provide a snapshot of the relative contributions of different land uses, which are summarized by ratios of revenues to service costs for residential, commercial and industrial, and farmland uses.

Working with the Land Stewardship Project, a Minnesota-based farmland and social justice organization, AFT conducted COCS studies in three outlying Twin Cities Metro Area municipalities. On average, AFT found the ratio of dollars generated by residential development to the cost of services provided was $1 : 1.04. In comparison, on average, for every farm dollar raised, only 50 cents was spent to provide services.