Growth Management UAP 5194 Professor: Mastran By: Matthew Steenhoek Assignment #3 3) Critics of strict urban growth boundaries

often charge that, by limiting land available for housing, such boundaries drive up residential prices and force the less affluent to live elsewhere. Portland, OR, and Boulder, CO, are often cited as case studies. Using the readings on Scholar and other readings you may find, examine this charge that urban growth boundaries limit affordable housing options. What is the relationship between urban growth boundaries and affordable housing?

What is the relationship between urban growth boundaries and affordable housing? It depends.

While a simple, intuitive look at the issue of artificially constrained land markets with unconstrained demand would seem to indicate that urban growth boundaries (UGBs) would lead to increased land costs, and in turn increased housing costs and loss of affordable housing, the issue is much more nuanced. Extenuating circumstances and conditions with which the relationship between UGBs and affordable housing must be viewed include the relative openness of the market, the strength of the regional economy, programs such as Inclusionary Zoning that are coupled with UGB legislation, the frequency and manner in which UGBs are modified, and the maximum densities allowed or required inside of the UGB.

The 2012 Brookings discussion paper entitled The Link Between Growth Management and Housing Affordability: The Academic Evidence by Arthur C. Nelson, Rolf Pendall, Casey Dawkins, and Gerrit J. Knaap offers the best study of these modifying factors. Several other writers

generally associated with Libertarian and Anti-Planner groups like the Reason Foundation and the Thoreau Institute have alternatively found that UGBs unequivocally have negative impacts on housing affordability (and freedom in general), see O'Toole (2004), Staley & Mildner (1999), and Staley, Edgens, & Mildner (1999). Not suprisingly, similar findings are purported by some suburban home building trade organizations, see Real Estate and Building Industry Coalition (Undated).

Scholars more commonly associated with Smart Growth have reached alternative conclusions showing that a properly conceived UGB legislative measure can actually result in neutral or negligible impacts on housing affordability, see Gerber & Phillips (2004), Marsh, Porter, Douglas, & Salvesen (1996), Litman (2009), and Knaap & Nelson (1992).

Both sides generally make reasonable and well researched conclusions, though some arguments feel strongly ideologically biased (see O'Toole (2004) and Litman (2009)). Ultimately, the answer is far from clear or conclusive and likely relates to the unique nature of individual housing markets, and the political, economic, and regulatory climate in which UGBs are implimented. For this reason, it is valuable to look at a specific case where UGBs have been implimented to better understand the roll that UGBs can play in housing affordability.

Portland, Oregon The UGB around metropolitan Portland, which was adopted in 1973, provides the longest and one of the most well documented examples of UGB implementation in the United States. The duration of Portlands UGB has made it an example that both sides of the UGB discussion turn to for support of their arguments.

For some, Portland represents overreaching governmental controls that have had serious negative impacts on the metropolitan region. OToole goes so far as to say that the smart growth polices of Portland, of which the steady implementation of the UGB is primary, are harmful to both the environmental quality of Oregon and the personal freedom of its citizens (O'Toole, 2004). To support this claim, OToole notes that Metro (the regional planning body in metropolitan Portland) predicted a growth rate of 80 percent between 1990 and 2040 but that the UGB would only be enlarged by 6 percent during that same period with the supply being created through increased density and infill development. This mandate for increased density is implemented through a requirement for minimum densities at 80 percent of the maximum which has been implemented in the Portland area (O'Toole, 2004).

Further, in a somewhat contradictory argument, OToole states that to smart-growth planners affordable housing means housing in which few people want to live, yet he notes that the value of land increased from $20,000 to $200,000 per acre between 1990 and 1996. The earlier part of his argument is clearly biased dogmatic conjecture and it conflicts with the latter half of the argument where market demand has had a modifying effect on land prices. These increases in land cost are then correlated to a change in affordability as measured by the National Association of Home Builders which found that Portland went from being one the nations most affordable housing markets before 1990 to one of the ten least affordable by 1996. No other circumstances related to the regional or national economy on housing prices or median incomes are discussed by OToole. For him, the presence of an UGB, increases in land value, and decreases in ranking on a trade organizations affordability scale are uniquely and discretely interrelated.

These themes of housing affordability being damaged by the presence of UGBs are further expounded upon by researchers Samuel G. Stately, Gerard Mildner, and Jefferson G. Edgens, see Staley & Mildner (1999) and Staley, Edgens, & Mildner (1999). Both of these papers, Urban Growth Boundaries and Housing Affordability: Lessons from Portland and A Line in the Land: Urban-growth Boundaries, Smart Gowth, and Housing Affordability were written for the Reason Public Policy Institute, a public policy research group that advances a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law (Reason Public Policy Institute, 2012).

To argue in support of market-based alternatives, which include purchase of development rights programs, full-cost pricing for on-site infrastructure, and the deregulation of the real estate market, Stately et al focus on the unforeseen impacts of UGBs: But, housing-price appreciation is a double-edged sword. On the one hand, higher prices may reflect greater demand for a scarce commodity (e.g., quality inner-city housing). On the other hand, higher housing prices may reflect a constraint on supply. In the latter case, higher housing prices reduce the overall quality of life for residents, since they must pay more for a home that may provide fewer benefits (e.g., smaller lots, more dense living). (Staley, Edgens, & Mildner, 1999)

This assessment of density as a reduction in quality of life reflects a clear value judgment on the behalf of the authors and an indication of the idea that no reasonable person would willingly chose to live in a dense environment. Further, Stately et al highlight that per the Metro 2040

Plan, the regional planning and visioning document for metropolitan Portland, there will be a housing shortage of approximately 8,500 units which will result in the displacement of some low and moderate income families even if targeted densities are achieved (Staley & Mildner, 1999).

This line of argument has been picked up by other groups around the country that are working to lobby against the proposed inclusion of the UGB in their area. One example is from the Charlotte, NC industry association called Real Estate and Building Industry Coalition (REBIC). In a position memo on the subject, REBIC sites a variety of disparate and non-contextual statistics about Portland land prices, lot sizes, and median home prices in order to reach the conclusion that UGBs will have a drastic impact on housing affordability (Real Estate and Building Industry Coalition, Undated).

While it is laudable for a real estate trade organization to be concerned about housing affordability, later sections of the memo suggest that alternatives to UGBs could include the outright purchase of land by governmental agencies and the use of local bonds to acquire parks, greenways, and open spaces. Further, the memo suggests that it is the responsibility of local governments to to plan and implement responsible capital improvement plans to facilitate and accommodate growth, not impose an artificial boundary to constrict growth. To further drive the point home, the memo concludes that REBIC continues to oppose the use of any type of urban growth boundary. This government designation greatly reduces any land available to the real estate community and destroys housing affordability. For REBIC, the veil of concern regarding the impacts on affordable housing that may result from the implementation of a UGB is understandably thin.

Alternative studies of the Portland UGB by scholars that are more smart growth sympathetic have yielded significantly different results. In The Regulated Landscape: Lessons on State Land Use Planning from Oregon, Drs. Gerrit Knaap and Arthur Nelson draw varying conclusions from median housing prices in the Portland region. Knaap and Nelson find that in the Portland metropolitan region, median housing prices are significantly below other comparable west coast cities and approximately comparable to national median housing prices and that housing in the rest of Oregon are below those found in Portland (Knaap & Nelson, 1992). Further, this indicates to Knaap and Nelson that growth management practices in the Portland metropolitan region have not fulfilled widely held expectations for housing cost escalation. Knaap and Nelson go on to point out an important link between wider economic patterns and the impacts of growth management practices; in Oregon in the 1980s there was simply not very much growth to be managed due to a regional recession (Knaap & Nelson, 1992).

Knaap and Nelson also draw a wider potential conclusion from these findings. They note that there is very little evidence that UGBs have constrained housing supply but rather that there is evidence that the requirements for higher-density zoning (the minimum 80 percent of maximum requirement discussed with OToole) have actually increased the supply of housing within the UGB. Knaap and Nelson find that this apparent increase in housing production, coupled with a successful development streamlining process which reduces development costs, has potentially resulted in an economic and housing climate that produces lower housing prices rather than higher prices as is typically assumed (Knaap & Nelson, 1992). The researchers note

that more research is necessary before a final conclusion can be met, but this provides a significantly different outlook on the effect of UGBs than was found by OToole or Staley.

More than 15 years later, this discussion carries on with a blog entry on the popular urban planning website, Planetizen.com, by Todd Litman, the executive director of the Victoria Transport Policy Institute. Victoria Transport Policy Institute is an independent research organization dedicated to developing innovative and practical solutions to transportation problems based out of British Columbia (Victoria Transport Policy Institute, 2012). In his post, entitled Smart Growth and Housing Affordability, Litman works to dismantle the claims made by Staley and OToole regarding the impacts of smart growth, and UGBs in particular, on housing affordability. Litman finds that the links drawn between growth management and housing affordability are muddled and reminds us that correlation does not prove causation.

Litman argues that UGBs do not inherently increase housing prices if there are not excessive restrictions on density or height because housing does not have an underlying fixed minimum amount of land. If you cant grow out, you must be able to grow up. If both are constrained to the point that market demand cannot be met, then housing prices will be affected. Litmans second argument focuses on evaluating affordability through the lens of total transportation and housing costs. He finds that affordable housing in a sprawling suburb may actually be a curse to lower income households that end up saving less in on their mortgage than they must spend additionally in gas and other transportation costs, not to mention the cost of time wasted in traffic congestion and the increased risks of being in a traffic accident (Litman, 2009). To support, this Litman refers to a study completed by Barbra Lipman that finds that low-income

families that live in the central city spend 54 percent of their income on the combination of housing and transportation while families in the same income band that live away from employment centers spend 70 percent (Lipman, 2006).

Litman goes on to argue that housing in dense transit accessible places, the sorts of places that good smart growth and growth management policies create, are better investments and less prone to economic shocks and foreclosures than auto dependent locations, and that they further increase total household affordability by offering compact housing types with lower utility bills, flexible transportation options and increased quality of life. Litmans final argument regarding total household affordability seems to be a more tangential argument that follows a reasonable logic but includes some value judgments regarding quality of life and was not immediately supported by outside data.

Looking at a number of case studies and wide academic research on the subject, the research team of Arthur C. Nelson, Rolf Pendall, Casey J. Dawkins, and Gerrit J. Knaap offer the most nuanced look at the roll that UGBs play in housing affordability. In their 2002 paper for the Brookings Institute entitled The Link Between Growth Management and Housing Affordability: The Academic Evidence, Nelson et al find that market demand plays a larger role in determining housing prices than growth constraints do, that housing prices can be raised by ill-designed regulations of either traditional land use measure or growth management, and that the challenge is to create properly designed regulations that mitigate against the negative impacts of sprawl while maintaining reasonable housing affordability.

Their first point is a very interesting one. Growth management in Detroit is not exactly a pressing issue, nor one that could have any conceivable impact on this shrinking city. Without an economy that drives demand, increases incomes, and expands employment opportunities, no measure of growth management is going to negatively impact housing affordability. Regarding the impacts of traditional land use regulation on housing affordability, Nelson et al note that large-lot zoning and minimum housing sizes can create a chain of exclusion that drives housing prices up and excludes low-income households from participating in the market. Additionally, they argue that properly crafted growth management policies can break this chain and create environments where low-income households can absorb higher housing costs because the total cost of transportation, energy, job access, services, and amenities are lower than they would otherwise be in a less dense or more decentralized housing arrangement. Further, Nelson et al warn that even well-intentioned growth management programs can be illdesigned; they can accommodate too much growth and allow sprawl, or they can accommodate too little growth and result in higher housing prices.

Through this analysis, Nelson et al show that the question of growth management and its impact on housing affordability is unique to the location that it is being implemented in, the status of the local economy, the bundle of other regulations that are already in place or which will be in place when the UGB is implemented, the geographic constraints of the UGB, the planned frequency or process of expanding the UGB, the proximity of comparable areas without growth constraints, and regional or demographic preferences for a variety of housing types (Nelson, Pendall, Dawkins, & Knaap, 2002). Will the creation of a UGB exacerbate housing affordability issues? Maybe, it depends.

Bibliography Ambrose, B. W. (2003). Urban Growth Controls and Affordable Housing: The Case of Lexington, Kentucky. Lexington: University of Kentucky. Brueckner, J. K. (2000). Urban Sprawl: Diagnosis and Remedies. Urbana-Champaign: International Regional Science Review. Gerber, E., & Phillips, J. (2004). Growth Management Policy in California Communities. Ann Arbor: University of Michigan. Knaap, G., & Nelson, A. C. (1992). The Regulated Landscape: Lessons on State Land Use Planning from Oregon. Cambridge: Lincoln Institute of Land Policy. Lipman, B. J. (2006). A Heavy Load: The Combined Housing and Transportation Burdens of Working Families. Washington: Center for Housing Policy. Litman, T. (2009, March 23). Smart Growth And Housing Affordability. Retrieved October 28, 2012, from Planetizen: http://www.planetizen.com/node/37958 Marsh, L., Porter, Douglas, & Salvesen, D. (1996). The Impact of Environmental Mandates on Urban Growth. Washington: U.S. Department of Housing and Urban Development. Nelson, A., Pendall, R., Dawkins, C., & Knaap, G. (2002). The Link Between Growth Management and Housing Affordability: The Academic Evidence. Washington: The Brookings Institution Center on Urban and Metropolitan Policy. O'Toole, R. (2004). A Portlander's View of Smart Growth. Netherlands: Kluwer Academic Publishers. Real Estate and Building Industry Coalition. (Undated). Urban Growth Boundaries. Retrieved October 28, 2012, from http://www.rebic.com: http://www.rebic.com/library/South%20Carolina/Urban%20Growth%20Boundaries.pdf Reason Public Policy Institute. (2012). About. Retrieved October 29, 2012, from reason.org: http://reason.org/about/ Staley, S. R., & Mildner, G. (1999). Urban-growth Boundaries and Housing Affordability: Lessons from Portland. Los Angeles: Reason Public Policy Institute. Staley, S., Edgens, J. G., & Mildner, G. (1999). A Line in the Land: Urban Growth Boundaries, Smart Growth, and Housing Affordability. Los Angeles: Reason Public Policy Institute. Victoria Transport Policy Institute. (2012, September). Home. Retrieved October 29, 2012, from http://www.vtpi.org/: http://www.vtpi.org/