Oregon farmers say they’re losing land to luxury homes and $800-a-night B & Bs. Hotly debated bills aim to fix that

Amid the millions of acres of Oregon’s protected farmland, a hot debate is underway as a wave of well-heeled outsiders demolishes century-old farmhouses to build multimillion dollar luxury homes or boutique hotels.

Many farmers say those developments are driving the costs of acreage far out of reach of anyone who wants to make a living off of the land. And the trend is so widespread, they say, that it’s posing an existential threat to their way of life, as fertile, food-producing land is converted to hobby farms or dream estates.

Examples have popped up all across the state. But nowhere is the pressure greater on farmland than just outside the Portland area and Bend.

A five-minute drive outside Forest Grove, a 101-year-old three-bedroom, one-bathroom farmhouse on 50-acres of hazelnut orchards and forest sold in 2021 for $1 million, then was replaced in 2022 with a 7,400-square-foot custom dream home now on the market for nearly $4 million. The new owner tore out the hazelnut trees so the new home has unfettered views of Mount Hood and Mount St. Helens, along with four spacious bedrooms, six bathrooms, two kitchens, two laundry rooms, a 15-seat movie theater and a swimming pool.

Between Sisters and Bend, a modest 2,100-square-foot ranch-style home on 20 acres of verdant green cropland sold for $525,000 in 2015. It was knocked down and replaced in 2019 by a 5,100-square-foot luxury home with a breathtaking, six-mountain view of the central Oregon Cascades and a 12-car garage. The land and new home sold last year for $5.2 million, 10 times the previous price.

And between Wilsonville and Newberg, the new owners of 25 acres of prime farmland constructed a stunning 10,000-square-foot residence in 2020, while keeping the original 1,550-square-foot farmhouse as a secondary dwelling. The entire property last sold for $6.25 million in 2022, close to five times what the price in 2014 before the mansion was built. That doesn’t count the value of the tennis court that has since been added to the property.

Prices for these three parcels shot up from $20,000 to $50,000 per acre before the high-end homes were built to $80,000 to $260,000 per acre after. That has left many farmers bemoaning the erosion of Oregon’s half-century-old farmland protections and crying out for solutions.

Hundreds of farmers and land-use conservationists have written letters to the Legislature or shown up to testify in support of a pair of bills that would put a significant damper on most anyone wanting to replace modest houses on land designated for farming with much larger, fancy estates. The bills also would prevent many non-farm ventures like the $400- to 800-a-night bed and breakfast rooms or $5,600-a-night AirBnB villa in Yamhill County wine country that farmers say also is jacking up land prices.

“Agricultural land is under attack,” said Cory Koos, a mid-Willamette Valley grass and clover seed farmer told a legislative committee earlier this month.

Opponents say it’s ‘class envy’

But the bills also have stirred fiery opposition from homebuilders, real estate agents and property rights advocates, who say the proposals are government overreach and target the wealthy. They say with competition and prices reaching new heights inside some of Oregon’s urban growth boundaries, land use laws in the countryside are too restrictive as is.

Dave Hunnicutt, the president of the Oregon Property Owners Association, said he believes the bills’ backers are “demonizing” the fortunate.

“This is the sort of class envy that results in very terrible public policy,” Hunnicutt told The Oregonian/OregonLive. “It’s no one’s business how big or small your home is. If you can afford it and it makes you happy, go out and build it.”

The bills also have sparked pushback from many other farmers, who are among the hundreds who’ve written lawmakers urging them to vote the proposals down. These farmers say they may one day want to build their own dream homes on their land or run side businesses that eclipse the strict limitations laid out by the proposed legislation.

Scottie Jones, a Benton County sheep farmer, rents two homes for up to 17 people on her farm-stay property, where visitors can bottle-feed lambs and pet donkeys. She told the committee she does it to stay afloat.

“I totally believe in protecting farmland,” Jones said. “But if you don’t protect the farmer then what’s going to happen with these properties is we’re going to lose them. And the people you don’t want to have buy them are going to buy them, and they’ll just have houses on them.”

Specifically, Senate Bill 77 would rein in non-agricultural businesses that have been permitted under Oregon’s so-called “home occupations” law, which was meant to allow farmers who wanted to earn a little extra income to offer piano lessons, part-time accounting work or the like out of their homes. But its size and scope have grown dramatically to include breweries, hotels and destination resorts. To combat that, under the bill a person running a side business on farm or forest land must reside in the home that the business is operated out of; would be barred from providing more than five customers at a time with food, drink or lodging; and would have to limit parking to no more than three customers’ cars at a time.

Senate Bill 78 would restrict the size of “replacement dwellings” to no more than 2,500 square feet or 10% larger than the original home’s size, meaning a 3,000-square-foot farmhouse could be replaced with a 3,300-square-foot home. The bill aims to shut down a major avenue for people who make their money in the high-tech industry, business or other non-farming professions and want to construct large and luxurious homes on agricultural properties.

Opponents, however, have scoffed at the size limitations that were suggested by farmers and written into the bill.

“Is a 2,501 square-foot house somehow a McMansion?” asked Hunnicutt, of the property owners association.

Sen. Jeff Golden, the Ashland Democrat who chairs the committee that is sponsoring the bills, said he’s been deluged with angry emails.

“There is controversy about all land use bills, but the furor around this has amazed me,” Golden said.

A bit of Oregon history

Admirers of Oregon’s 1973 landmark land-use laws — Senate bills 100 and 101 — say they have protected some of the nation’s most productive agricultural land, helped prevent sprawling development and led to the creation of urban growth boundaries around every city in the state.

The legislation was signed into law by Gov. Tom McCall, who gave an impassioned and historic speech condemning “sagebrush subdivisions, coastal condo-mania, and the ravenous rampages of suburbia.”

Among other prohibitions, the new laws generally made it tougher to build homes on land zoned for exclusive farm use or forest production, unless the owners could prove they were making a living off working the land or the land wasn’t suitable for growing. The laws also restricted most non-agricultural businesses from being operated on farm or forest property.

By the early 1980s, however, rough economic times brought on by a recession and loss of timber jobs in Oregon prompted a push to loosen those tight controls.

Adjustments to the law eased restrictions on home building. And for businesses, where once there were about half a dozen exceptions, there eventually came to be more than 60, including golf courses, campgrounds, air strips, dog kennels, water-bottling plants, fireworks manufacturers, solar power facilities, museums, hotels and bed-and-breakfast inns.

Further easing the 1973 protections were the voter-approved passage of Measure 37 in 2004, which required the state to compensate property owners for any government rules that hindered development, and the 2007 voter-approved remedy to it, Measure 49, to allow some limited development.

But Golden, chairperson of the Senate Natural Resources and Wildfire Committee, said Oregon’s land use laws, even as amended, have overall been a win for the state’s residents.

“Oregon doesn’t look like southern California or the Bay Area because of Senate Bill 100, and a lot of us are grateful for that,” said Golden, who is 74. “As someone who grew up in the San Fernando Valley (in California) and watched it get paved over, I like what we did in Oregon, even though nothing’s perfect.”

That’s where Senate bills 77 and 78 come in, Golden said. Advocates for tougher protections say over the decades of land-use debate, no one could have foreseen the proliferation of what Golden calls “trophy places in the country.” Or that major money making ventures would take over agricultural properties to the extent that they have.

It’s unclear how widespread support is for the bills among the five-member committee that could send it to a vote on the Senate floor. The two other Democrats, Sen. Floyd Prozanski of Eugene and Sen. Kathleen Taylor of Portland, didn’t respond to inquiries about their positions on the bills. Neither did Republican committee member Sen. Fred Girod of Silverton.

Committee member Sen. Todd Nash, a Republican and Enterprise cattle rancher, opposes both bills. He said he thinks Oregon can protect agricultural lands while continuing to allow farmers and ranchers who are struggling to make a living to augment their incomes with side businesses. He said he doesn’t believe in smothering rural entrepreneurism.

“What other business in the world do we try to devalue so the next person who purchases the property or the business gets it at a cheaper price?” Nash said. “It’s counterintuitive to what we do in the business world.”

Nash is a chief sponsor of a third farming bill that would do the opposite of the first two by relaxing restrictions. Senate Bill 788 would allow farms east of the summits of the Cascades, with the exception of those in Deschutes County, to generate extra money by hosting weddings and other events without going through county permitting processes.

‘Are we really losing farmland?’

Proponents and opponents of Senate bills 77 and 78 can’t even agree if Oregon’s farms are under threat.

The Oregon Property Owners Association points to figures in a 2024 report by the state Department of Land Conservation & Development that state that 99% of the land zoned for exclusive farm use still retains that zoning. The association also has laid out its arguments in a piece titled “Are We Really Losing Farmland in Oregon? No, But Don’t Let the Truth Get in the Way of a Good Story.”

But the nonprofit 1000 Friends of Oregon, which was founded by McCall and lawyer Henry Richmond in 1974 to watchdog land use management, says that farmed land in Oregon is most certainly shrinking. The organization points to the latest 2022 census by the U.S. Department of Agriculture, which shows the acres of land that is farmed has decreased 25% since 1950. In 1000 Friends’ view, land that is actually producing food and other agricultural commodities is what matters, and land that is zoned for farming but isn’t being used for it undermines that goal.

Washington County farmer Aaron Nichols said the valley that he farms in, stretching from North Plains to Helvetia, used to be home to dozens of working farms. Now, he counts six, including his. Now peppered all around him are sizable homes approved under Measure 49 as well as under the state’s “replacement dwellings” law, he said.

Nichols believes that has been driving up the prices. He said the 15 acres he farms yields a bountiful $40,000 worth of organic produce per year and he’d love to double in size, but he can’t afford to.

“I’m standing right now on some of the best farmland in the world, and to have it replaced by someone who wants 80 acres of front lawn or to put two cows on it, that’s not good public policy,” Nichols said. “It might be nice for those folks who have a lot of money, but not for the rest of us.”

Regularly, he said he receives letters from real estate agents asking if he wants to sell his land and home, a 1901 hunting cabin that was added onto in the 1990s. It’s just a 10-minute drive from Intel, where employees earn some of the highest salaries in the state. He’s fairly certain that the new owners would replace it with a glitzier version.

Jim Johnson, working lands policy director for 1000 Friends, said the arrival of people who have no interest in farming also has created a culture clash that can interfere with farmers’ ability to do their jobs. He spent decades working for the Oregon Department of Agriculture, where he said urbanites who moved onto farming properties expressed their dislike of the odors of livestock, dust churned up from fields and the use of pesticides.

“You would not believe the complaints I got,” Johnson said. “‘That guy is out there at 4 in the morning running his combine harvesting his crop. I can’t sleep.’ Well, one of the things I’d ask them is: ‘Did you think about that when you moved out here? Did you know that this land was zoned exclusive farm use?‘”

Jason Lett, owner of The Eyrie Vineyards in Yamhill County, said he has noticed another consequence of increasing development on agricultural lands: competition for water. He said once his well pumped 25 gallons per minute. Now it’s one.

Lett told the legislative committee earlier this month that he worries extravagant tasting rooms and hotels are taking over farmlands and threatening to transform Oregon’s wine country into what he considers the over-the-top, overdeveloped landscapes of Napa Valley in California.

“Vineyards do make for beautiful scenery, but like farmers in Napa Valley, we are fighting a wave of commercial businesses who are selling our scenery at the expense of our farming,” Lett said.

Among them is the historic Black Walnut Inn, which rents its nine rooms for up to $800 per night, and the Grange Estate, another nine-room upscale option that opened in Dundee Hills wine country last year. Both are owned by California billionaire Bill Foley’s Foley Entertainment Group.

Opponents of such developments scored one recent legal victory, with the Oregon Court of Appeals ruling against the Grange Estate — a non-farming business — operating on agricultural land. The Grange Estate has appealed the case to the Oregon Supreme Court and is awaiting a decision.

Lett said he welcomes high-end development in his county because it attracts customers who are willing to buy $300 bottles of wine. But if the development isn’t directly related to agriculture, he believes it should be located in cities such as McMinnville, Dundee or Carlton.

A country estate

Rob Olson, however, argues that land within the state’s urban growth boundaries has become so expensive that the system has got to give. Olson, a construction contractor, tore down the 101-year-old farmhouse on the 50 acres of land outside Forest Grove mentioned near the beginning of this story and built that 7,400-square-foot dream home in its place.

“If somebody wants more than just to live in a subdivision or on top of each other, you have no choice but to go out and buy farmland,” Olson said.

A similar house built in Lake Oswego, where his construction company is based, would cost millions more, he said. “And who can afford that?”

Olson said when he bought the property in 2021, no farmer was willing to pay the $1.035 million that he did, and he provided the multi-generational farm family who no longer wanted it an influx of cash.

The nutrient-rich soils also have not gone unused. He said he has allowed a neighboring farmer to plant wheat and clover on a portion of the property for free — a win for the farmer and for himself, because he’s taxed at a lower rate.

Now that he and his wife have put the property up for sale, with an asking price of about $4 million, he’s not sure if the new owners will allow the land to continue to be farmed. Whatever they decide is fine by him.

Summing up the sentiments of many opponents of stricter controls on farm land: “If they purchase it,” Olson said, “I believe it’s their right to do with whatever they want.”

— Aimee Green is covering the Oregon Legislature this session. Reach her at 503-294-5119, agreen@oregonian.com or on Bluesky.

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UPDATE APRIL 11: Senate Bill 77 and Senate Bill 78 died in committee after failing to attract the necessary votes. Sen. Jeff Golden said he’ll propose similar measures during the next legislative long session. Read that story here.

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