Zoning woes:

Business owners worry new classification could de-value their property

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Just west of Rose Lake on Highway 3 lies the old township of Lane.

It was subdivided into residential lots years ago and platted with streets. The town never took hold, and was sold off.

That's how the Scheffelmaier family got hold of a large chunk of it back in the 1950s.

Since then, Fred Scheffelmaier has developed a good portion of the property into a thriving custom butchery.

In 1991 he applied with Kootenai County for a conditional use permit to operate the meat plant on his rural property. He has invested hundreds of thousands of dollars and employs half a dozen people.

With an approved permit, he had a reasonable expectation that if the county ever decided to rezone the area, his now-successful business property would be classified commercial.

He was wrong.

"They have me re-zoned into working lands 40-acres large," he said. "I've checked into it and this classification may have devalued my property as much as a couple hundred thousand dollars."

Working Lands Large is a new land use classification under Kootenai County's proposed Unified Land Use Code that is currently out for public review.

The county's Community Development Office has assured Scheffelmaier that he can continue to operate his business under the conditional use permit if the new code is adopted, but it is complicating his business plans and his other property investments.

"I have to hire a consultant now to do something that I used to be able to just walk in and apply for," he said, adding that he has also had to hire an attorney and completely reconsider how he is going to continue financing his business into the future. "I have talked with my banker, and they won't lend if my business is a non-conforming use."

The first page of the proposed land use code says it is being done to make the land used codes easier to understand, Scheffelmaier points out.

"But I think it's going to shut down growth in the area," he said. "I feel like it's taking my property rights away, and giving far too much power to one department in the county."

Schefflemaier is not alone.

In fact, Medimont resident John McFaddin says there has to be hundreds, if not thousands, of people who own property in the unincorporated areas of Kootenai County who are in a similar position.

"They just don't know it yet," he said.

McFaddin is a retired real estate appraiser who served the City of Spokane's Planning Commission for six years. He spent a career assessing the value of property rights.

"One thing that is for sure about this document," he said, referring to the proposed ULUC, "this thing will lead to uncertainty, and uncertainty is risk, which of course reduces value."

McFaddin said one of the first questions Fannie Mae or Freddy Mac asks when they are underwriting mortgage loans for real property is: "Does the property conform to the current land use codes?"

"It says right in the ULUC document that the average parcel size out here is 30 acres," McFaddin said. "Working Lands Large requires a 40-acre minimum, which means the average parcel will be non-conforming."

McFaddin has analyzed the ULUC and found pockets of smaller parcels proposed for rezoning to the Working Land Large category.

In the Latour Creek area of Cataldo, he found that 60 to 80 percent of the properties were smaller than the 40-acre lot size proposed in the ULUC. In the Lower Eagle Creek area, he found about 75 percent of the properties were smaller than the required 40 acres.

"I doubt any of these people are aware of the new 40-acre requirement," he said.

Complicating things even further is the fact that most banks won't offer mortgages on properties over 20 acres, said Gary Mitchell, another Medimont resident who is concerned about his property investments.

Sitting on the deck at Mitchell's house, he can point out a half-dozen land owners who will be non-conforming under the new land use codes.

"There are so many people out here that are unaware of what is happening," he said. "The county commissioners will tell you they have had meeting after meeting out here, but the reality is those meetings were just exercises to justify what they are doing."

So why are they doing it?

"That's the million dollar question," said Brad Corkill, owner of Whiteman Lumber company in Cataldo. His mill will lose its industrial zoning to the Working Lands Large zone if the ULUC passes. "Sure they can grant me a conditional use permit, but that's not going to help if I want to transfer ownership to my son in the future.

"I've talked with my banker and I will not be able to expand if I need to under this non-conforming use."

His banker, who asked not be named, said most banks won't lend on a property that is operating under a conditional use permit.

"Most conditional use permits have to be renewed and can be denied at a later date," he said. "There are some real implications with what they are doing out there, and I am not sure the county commissioners are fully aware of that."

He also confirmed that most government-backed mortgages are not available on properties over 20 acres.

Like many of the others who have become aware of the potential impacts of the ULUC, Corkill has hired an attorney to help him find some resolution. He has also contacted his legislators and plans to get more of the community involved.

"I want to talk with the Chamber of Commerce and see if they will take this up too," he said. "Most people don't realize - even the people who live in the cities - that they are the ones who will be paying for an awful lot of lawsuits if this goes through the way it is."

Scott Clark, director of the county's community development office, said there is little chance that the proposed ULUC will pass the planning commission without any changes.

"That's why we have it out for public review," he said. "We want to encourage people to come in here and point this stuff out."

Clark said he is working with Scheffelmaier and Corkill to resolve their issues, which could mean ultimately rezoning the properties to fit their current uses.

"But that's not my call. It will be up to the planning commission to make any changes at this point," he said.

As for the clusters of small properties in Eagle Creek and Latour Creek areas, he said that may also warrant a further review.

"These are the things we are looking for," he said. "When you can see a pattern in areas like these, it is probably worthy of reconsideration."

Still, Clark said even if the commission decides not to change the Working Lands Large designation in those areas, the smaller parcels that have been created legally will be grandfathered in.

In fact, he added, that anyone who had planned to split their property into lots smaller than 40 acres per unit should do it before the ULUC is adopted.

After the ULUC is adopted, he added, anyone hoping to subdivide their land in a Working Lands Large zone will be limited to 1 unit per 40 acres.

"If you have 160 acres out there, you can still split it up into lots smaller than 40 acres, but you can only have a total of four houses on that 160 acres," he said.

Larry Jeffres, of North Idaho Building Contractors Association, sat on the county's technical review committee, and he is working with the Coeur d'Alene Chamber of Commerce and the Coeur d'Alene Association of Realtors to hold a public forum on the issue.

"We are planning to hold it the week before the commission hearings," he said, adding he will have more details later this week.

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