Highest and best use is an archaic concept


theburkholder.blogspot.com

While writing my prior blog post regarding John Steinbeck’s thoughts on urban America, I began pondering the concept of “highest and best use.” It is a term that is so often thrown around by realtors, assessors, appraisers, and even planners. I imagine if you asked five different people what the “highest and best use” is for an individual site, you may very well receive five different responses.

The inherent problem I see with “highest and best use” is that it assumes change is inevitable and whatever is there now is somehow insufficient (from a profit perspective). Whenever you throw money into the picture and the equation gets severely skewed towards development (or redevelopment) and away from remaining undisturbed.

Source: flickr.com

I would argue that in many instances a lovely park or undeveloped green space is a much higher and better use than a commercial building or warehouse – for starters is reduces noise, air pollution, and the heat island effect. The problem comes with trying to quantify the value of intangibles like fresh air, bird songs, peacefulness, quiet, relaxation, beauty, scenic views, recreation, and mental health.

So, let me propose an alternative to what I think is the archaic concept of “highest and best use.”  I propose “rational use.” Humans are rational beings, or at least we like to think we are rational. As rational beings we ought to be able to come to a consensus on the use(s) that is best (or most rational) for a given property. Granted, not everyone will have the same opinion, but that is seldom true even under highest and best use. The difference between “rational use” and “highest and best use” is the removal of the monetary influence.

In a perfect world no zoning or planning decision is supposed to take monetary issues into consideration. That is a basic tenet of planning. But, as we all know, it still happens – the minute economics are brought into the discussion. By affixing a rational set of non-monetary standards to each land use decision, the goal would be to substantially reduce (or preferably eliminate) the greed/profit factor in making land use decisions.

Is my suggestion of rational use a Pollyanna notion? Perhaps. In a capitalist and materialist society, getting past the notions of monetary value, profit, and greed is difficult. But, without a concerted effort to move beyond “highest and best use,” we, as a society will continue to gobble up land like hungry caterpillars (both the bulldozers and the insects), will continue to see many of our cities and inner suburbs decay, will lose historical and ecological treasures, will continue wasting our precious and limited resources, and will continue focusing on unhealthy living habits cocooned in metal cases both during our lives and six feet under after death. Not the Wall-E kind of future I prefer. How about you?

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6 Responses to Highest and best use is an archaic concept

  1. usecraigslist says:

    Thought provoking post—thanks! Playing devil’s advocate, could you not argue that the best rational use would actually result in the most economic gain… over the long term? Your building vs. park example reminds me of Central Park: the landowner certainly could have make a quicker buck by auctioning off that land when the grid was laid down, but I suspect if you added the increase in rents and property taxes accumulated since then for the parcels (and neighborhoods) adjacent to the park, you come out ahead in the long term. Same with historic buildings or neighborhoods: you could argue that they serve a long-term economic development goal. They command higher rents of residents and they allow a greater diversity of shops that people want to be near. Suburban sprawl has been demonstrating the converse for a few years now—a great idea from a 5-year perspective when they were built, but now they’re underwater.

    (This is coming from a guy who has made a habit recently of arguing against most downtown parks, mind you, because I contend that the majority of them are failures. But in the right spot, less-intense uses are actually long-term economic winners.)

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    • Rick Brown says:

      Thank you for the informative and thought-provoking response. I believe the intangibles enjoyed in central park as well as the increased values afforded adjacent and nearby properties would outweigh the value of developing the park.

      Wish I had the mathematical ability to develop an equation, aka the show NUMB3RS. But alas, I dont.

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  2. basil berchekas jr says:

    i agree; it IS an archaic concept. “Highest and best” is highly subject to “interpretation”…

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  3. Upstate Ellen says:

    I agree with you about the implications of the term “highest and best use.” As a consultant who is often called upon to conduct market analyses, I avoid using the term, because I see my role much differently than that of an appraiser or assessor. In fact, I will correct my clients when they refer to my analysis as a “highest and best use analysis.” When I assess the potential uses of a site, a group of sites, or even an entire downtown district, I take into consideration a number of factors, including what the community wants (as evidenced by an adopted comprehensive plan and interviews with municipal leaders), the types of businesses that could be supported by customers (in the case of retail uses), the location of the property in the context of the community (e.g., is it at a major gateway?), etc. A real estate professional may not examine all of these factors; for an appraiser, “highest and best use” refers to profit potential, and that doesn’t necessarily align with what makes the most sense for the community.

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