Smart Growth
by Ann Eberhart Goode, Elizabeth
Collaton, and Charles Bartsch
North Midwest Institute
Urban sprawl was a pivotal issue
during mid-term elections in 200 cities and states.
Focus groups on growth management proliferate in
communities across the country. Vice President Al Gore
recently announced three new federal initiatives that
could help Americans build more livable communities.
What's going on? These and other initiatives add up to a
national upsurge of interest in "smart growth"
-- a view that metropolitan growth patterns can and
should serve the environment, the economy, and the
community equally.
Smart growth takes aim at the programs
and policies that literally drive development away from
existing communities. Veterans of urban planning argue
that the issues pushing the smart growth debate, while
not new, have emerged into a fundamentally different
approach to maintaining metropolitan areas as
sustainable places to live and work.
Turning urban development scholar
Anthony Downs' list of sprawl indicators on its head, it
is possible to outline smart growth goals that address
the interconnections of environment, social and public
health, and economic sustainability. Downs suggests that
smart growth can:
- encourage compact forms of
development (both commercial and residential) that
integrate land uses;
- reduce air and water pollution by
encouraging forms of development that maximize use of
mass transit and reduce the need for automobiles; and
- enhance the economic
competitiveness of cities by reversing the trend of
isolated, concentrated poverty in urban cores through
revisions to the federal tax code, federal housing
program incentives, local "fair share"
housing policies, and regional tax base sharing
strategies in order to reduce fiscal disparities among
localities.
The Northeast-Midwest Institute,
noting the key role of metropolitan areas throughout the
region, is researching the underlying federal policies
that discourage smart growth. This effort's scope is
potentially enormous, as illustrated by a recent inquiry
to the General Accounting Office (GAO) from Senators Jim
Jeffords (R-VT), co-chair of the Northeast-Midwest
Senate Coalition, and Carl Levin (D-MI), co-chair of the
Coalition's Great Lakes Task Force. The lawmakers
identified 13 possible junctions at which federal
policies and programs may expedite flight from existing
communities close to urban centers. GAO investigators
and the senators have agreed to narrow their research to
four broad areas: housing, transportation, agriculture,
and tax policy. Early results of this research are
expected in April 1999, hopefully offering discrete
ideas for legislative proposals to encourage smart
growth.
The Institute, building on its
extensive brownfield work, also is developing a smart
growth workbook and conference format to help individual
communities understand the range of issues specifically
associated with infill development. This approach to
project development maximizes use of already developed
land and infrastructure, taking cues from the emerging
practices of traditional neighborhood design, new
urbanism, and transit- and pedestrian-oriented
development. Common elements of these movements stress
the benefits of mixing land uses, integrating housing
types and price ranges in order to accommodate
affordable housing needs, and favoring access over
mobility through transit-oriented development. With
support from the Environmental Protection Agency, the
Institute's infill development workbook also will serve
as the "curriculum" for a community-based
conference.
Federal Barriers to Smart Growth
Even as innovative planning and
development ideas begin to take hold in some
communities, federal programs often discriminate against
widespread brownfield reuse, infill redevelopment, and
transit-oriented projects. Federal regulations can push
new investment out of urban cores, and national spending
policies often pull investments to previously
undeveloped areas.
Federal subsidies for new development
beyond the existing urban fringe include an array of
infrastructure programs, notably transportation. The
federal transportation program long has focused its
spending on new highways, and states have mirrored that
priority. Repair and preservation of existing capacity
have been secondary goals, and transit has been the poor
step sister to highway development. These priorities
began to change in 1991 when Congress overhauled the
federal transportation system. The new legislation
recognized the completion of the National Highway
System, and it refocused on managing congestion and
improving air quality. Congress continued these trends
in 1998 when it updated the federal transportation law.
The share of funding dedicated to new highways was
reduced, while maintenance and transit spending both saw
moderate increases.
The Transportation Equity Act
(TEA-21), as the new law is known, is a good model for
federal program innovation. It not only recasts direct
spending priorities, it ferrets out less obvious
subsidies and barriers. For example, past
government-supported, employer-provided transportation
benefits encouraged automobiles and highways over mass
transportation. The value of free parking was entirely
deductible, while transit benefits were limited to
$15-$21 per month. Under the new law, employers can
deduct up to $65 per month in transit benefits, and
parking benefits are capped at $175. While the playing
field remains tilted, it is somewhat improved.
On the regulatory side, TEA-21 retains
some of the flexibility in spending that was introduced
in the 1991 highway program. It also compresses the
planning requirements that regions must meet as they
develop their transportation priorities for state and
federal funding. States also may allocate more of their
federal resources to environmental reviews, and they
must conform to tighter time frames for such reviews.
TEA-21 also created a demonstration
program for innovative approaches to link land use,
community, quality of life, and transportation needs.
The Transportation and Community and System Preservation
Pilot program (TCSP) supports efforts that
"increase the efficiency of the transportation
system while decreasing its impacts on the environment,
lessening the need for costly future investments, and
providing efficient access to jobs."
Other agencies also are showing a
willingness to determine if their core programs
inadvertently encourage sprawl and inefficient
development. Although as a regulator, the Environmental
Protection Agency (EPA) doesn't provide extensive
subsidies to any sort of development, with the exception
of the state revolving funds for drinking and wastewater
treatment facilities, it has made extensive use of
demonstration programs to promote smart growth. EPA's
Brownfield Economic Development Initiative, for
instance, has provided grants to more than 200 cities
wanting to clean up and redevelop contaminated or
potentially contaminated property.
The Role of Design and Community
Involvement
A new breed of town planners stresses
that "design is not an extra." At a recent
gathering of city planners, Victor Dover of Dover, Kohl,
and Partners (Miami, FL) listed the five critical
physical elements of traditional neighborhood design.
Success, he said, often involves:
- giving the development an
identifiable center and edges;
- building at a scale that
encourages walking to destinations;
- offering a mix of land uses and
building types;
- featuring a network of walkable
streets (sidewalks, trees, shade); and
- allowing for special sites and
buildings for civic purposes (library, town hall, post
office).
Such principles are responses to the
endless miles of suburban tract housing that dominate
the "garagescape," as Dover likes to call it.
Even the designed high-end communities in outer-ring
suburbs -- because they are so isolated -- discourage
walking, separate land uses intentionally, and require
people to spend a lot of time in their cars.
Tools available for communities to
reach consensus on the design principles include visual
preference surveys, computerized photo-graphics
programs, and commercially-available GIS mapping
products that can help communities take the long view on
how and where to manage growth.
Yet sophisticated design tools must be
complemented by participation and buy-in by community
members. Such public involvement often is the most
controversial and elusive element of urban
revitalization strategies. "Too much"
community participation can seem burdensome to
developers; "not enough" can perpetuate the
often adversarial roles adopted by community groups and
local officials, gridlocking progress.
The good news is that models are
emerging nationwide that offer "place-based"
approaches to determining community priorities and
needs. For example, civic officials in Trenton, New
Jersey, organized an eight-week local leadership course
that enabled graduates to develop their concerns, back
them up with facts, and present them effectively to the
city council. The Chamber of Commerce in the Kendall
neighborhood of South Miami culminated a three-year
effort with a week-long planning charrette involving
more than a hundred community residents, numerous local
and state government officials, and
nationally-recognized planning firms. In another example
of community outreach, the community development agency
orchestrating a brownfield cleanup in Minneapolis
televised its public hearings and formed a citizen task
force that identified 18 areas of concern that were
resolved before the project proceeded.
Infill housing raises its own
community outreach challenges because it centers around
the politically divisive issue of the availability of
downtown housing. Especially as urban cores are reborn
as prestigious places to live, the provision of
affordable housing becomes a hot political issue for
local officials, but one that is vital to making infill
development viable. The phenomenon of gentrification has
made many downtown apartments too expensive to house
poor or moderate-income residents. Creative approaches
to affordable housing, especially those that mix housing
types and price ranges, are helping to break up the
isolated poverty in inner cities.
New urbanist planning firms have shown
how communities have stifled criticism of density by
combining design features with public amenities like
open space and parks in order to create diverse
neighborhoods. In the best of development projects,
high-end, single-family homes co-exist peacefully with
tastefully-designed, multi-family housing. Dallas, for
instance, is cycling many of its commercial buildings
into residential use, and its officials see downtown
housing as the means to becoming a more livable
community.
Local Leadership
Maryland, New Jersey, and Colorado are
some of the states taking the lead on smart-growth state
initiatives. Yet much activity is occurring on the local
level. Visits to half a dozen cities around the country
have shown an encouraging mix of efforts to translate
smart growth principles into practice. Interviews tell
of the numerous barriers, including institutional
gridlock, city leadership selling out to developer
interests, community "NIMBY" opposition
tactics, and zoning codes. But a growing number of local
leaders are confronting the affordable housing crisis;
avoiding duplicative and costly infrastructure by
limiting development subsidies to existing communities;
and protecting natural resources through conservation
easements, open space bonds, and urban parks. Consider
the experience of Brea, California.
Located just southeast of Los Angeles
in Orange County, Brea has aggressively revitalized its
downtown. With a population of approximately 100,000,
the city has been affected by the movement of residents
-- and then jobs -- to the "inland empire"
counties of San Bernardino and Riverside, where land and
housing are less expensive than in developed Orange
County. In order to maintain its quality of life as well
as its tax base, Brea developed a comprehensive program
to make the city an attractive and affordable place to
live.
Brea's redevelopment efforts focused
on its downtown, which was experiencing a downward
succession of land uses. Before the revitalization
effort began, the area hosted numerous vacant structures
originally built for oil field workers.
("Brea," in fact, is the Spanish word for
oil.) Most of these houses were in bad condition, and
some had never been tied into the city sewer system and
were still served by septic system. In addition, a major
new highway located a mile or so east of downtown,
completed in 1974, spurred retail and commercial
activity to relocate away from downtown.
City leaders in 1972 formed the Brea
Redevelopment Agency (BRA). While Highway 57 drained
activity away from downtown, it did facilitate in 1977
the development of the BRA's first project, the Brea
Mall, between downtown and the highway. The mall is the
region's second largest, generating $350 million in
sales annually.
The city also assembled downtown
parcels, cleared much of the land, and began to develop
a master plan. In October 1989, the City Council hosted
a "Downtown Charrette" to help create a
downtown master plan. The charrette elicited community
comments on both the role and location of downtown, as
well as the specific design and elements of this new
part of Brea. The resulting vision document articulated
the community's goals and created a framework for master
planning and development. Some general goals included:
Downtown should be the symbolic focal
point for the community;
High-quality design and development
are needed;
Downtown should appeal to Breans of
all ages and backgrounds;
Downtown should be linked visually
and functionally to the Brea Mall and the Civic
Center;
Historic preservation should
highlight oil industry heritage;
Brea wants a 24-hour city in the
downtown area;
Diverse housing options should be
provided downtown; and
Traffic facilities should not carve
up downtown activities, but vehicular traffic must be
well served.
The ideas and choices articulated at
the charrette, along with the few existing site
constraints, allowed the resource team to develop a
conceptual plan for downtown. In addition, renderings of
how village-style development could look were developed
and provided in the final vision document.
Despite a severe recession in the
early 1990s, much of the downtown envisioned by Brea's
citizens now has been completed. New residences have
been constructed, others have been revitalized, and new
commercial and institutional buildings are occupied.
While more development is on the near horizon, downtown
Brea is alive with a new activity that is well
integrated with the surrounding neighborhood and
commercial uses.
Brea's revitalization efforts are
notable on several fronts. First, the public's early and
consistent involvement forged a vision that guided
difficult development choices throughout the project.
Second, inclusion of a strong housing program enabled
the project to reach its goal of having a dynamic
downtown accessible to low- and moderate-income
families, as well as to those who can afford more
expensive units. Third, Brea's redevelopment staff
formed many partnerships that leveraged their human and
financial resources. These long-term commitments are
paying off handsomely in a livable downtown.
Financing Smart Growth
Redevelopment in the urban core can be
a complex matter, and private financing sources are
generally more expensive than in less developed suburban
areas, where projects can be simpler and risks
considered lower. High-end office developments generate
enough revenue to be attractive investments in urban
core areas, but less intense uses and smaller projects,
including infill housing, historically have not. In
addition, mixed-use projects, another important element
of the smart growth agenda, often face a financing
hurdle because of their complexity and attendant time
risks.
A major change in the capital market
for urban infill development is the emergence and rapid
growth of Real Estate Investment Trusts (REITs), which
both acquire and develop properties. Compared to other
developers or investors, a REIT's functional distinction
is that its tax treatment encourages the holding of its
properties as a primary source of income. As a result,
REITs tend to focus on a specific sector or geographic
market, and can become major stakeholders in their
communities. Since they provide an efficient and liquid
form of real estate investment for institutional
investors, such as pension funds, REITs also can
significantly improve local capital markets where they
focus. In addition, because they tend to hold their
properties and develop an unusual (for financing
intermediaries) depth of expertise regarding their
markets, REITs can manage risks that have made
redevelopment so expensive in the past. Several cities,
including Dallas, point to a REIT's participation as a
key element of their successful infill development
programs.
Public finance mechanisms also have
been changing to better stimulate economic activity and
investment in urban areas. Noting that site preparation
of downtown tracts usually includes extensive
environmental assessments and cleanups, and that
investors are still reluctant to cover those costs, the
public sector has worked to fill this financing gap with
loan guarantees, subsidized loans, or cash grants. Local
officials increasingly see that the benefits of bringing
new business activity to established city locations
outweighs the risks accompanying the acquisition of
abandoned sites. The public sector also is showing that
with limited seed investment and assistance with
managing potential cleanup liability, it can establish
the climate that invites greater levels of private
involvement in smart growth projects.
Tax increment financing (TIF),
available in nearly 40 states, traditionally has been
employed for numerous types of economic revitalization
efforts, and is playing a more prominent role in
brownfield and infill development. The TIF process uses
the anticipated growth in property taxes generated by a
development in a specific area to finance public-sector
investment in that zone. TIF programs are built on the
concept that new value will be created -- an essential
premise of most smart growth initiatives -- and that the
future value can be used to finance part of the
activities needed now to create that new value, and that
ultimately the new value will accrue to the
jurisdiction's tax base.
TIF bonds are issued for the specific
purpose of redevelopment -- acquiring and preparing the
site; upgrading utilities, streets, or parking
facilities; and carrying out other necessary site
improvements. However, many jurisdictions have been
hesitant to use TIF mechanisms for infill projects since
it can be difficult to retire the bonds if projected
development fails to materialize or unanticipated
complications arise. Some local economic development
practitioners also cite the complexity of many TIF
initiatives as a practical disadvantage.
California's redevelopment law offers
a new way to focus TIF funds on infill projects. Tax
increment financing long has been available in
California, and 20 percent of the revenue from TIF bonds
has been earmarked for affordable housing projects in
distressed areas. Yet because these housing projects,
for many reasons, often did not materialize, the state
legislature recently required jurisdictions to choose
between obligating the affordable housing funds within
four years or having none of the TIF revenue available
for any type of investment. This amendment creates a
strong incentive for creating affordable infill housing.
Since housing is such an important part of balanced
revitalization of urban areas, this policy also is a
strong addition to the public sector's financing
portfolio.
Conclusion
Like brownfield redevelopment, smart
growth and infill development require an integrative
approach to land development that incorporates
environmental, economic development, and community
needs. Local governments are responding to the pleas for
more livable communities, and private capital markets
are beginning to meet the high demand for urban
reinvestment. Federal policies should be changed to
support these efforts.
Ann Eberhart Goode, Elizabeth Collaton,
and Charles Bartsch coordinate the Northeast-Midwest
Institute's Urban Environment program.
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