Why Urban Growth Boundaries Fail

22 July 2001 - 12:00am
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Housing affordably drops in Portland, but increases in Atlanta. Are urban growth boundries are causing minorites to be locked out of the American dream?

Wendall CoxAdvocates of smart growth have been concerned about declining housing affordability in their "city of a hill," Portland, Oregon. So when Georgia Tech's Dr. Arthur C. Nelson hypothesized that rising costs represented capitalization of Portland's desirability in housing prices, straws were grasped throughout the movement. Nelson's hypothesis was repeated as sacred truth. But the foundations are as sand.

Portland's housing affordability, as measured by the National Association of Home Builders Housing Opportunity Index fell 56 percent from 1991 to 2000, the worst performance of any of the largest 85 metropolitan areas. (The Housing Opportunity Index measures the percentage of families in the metropolitan area that can be afforded by the median income household.)

Worse, the capitalization theory would require similar cost escalation in metropolitan areas growing faster than Portland. But this is not the case. Housing affordability increased four percent in Atlanta and eight percent in Phoenix (which grew 45% and 70% respectively faster than Portland).

Just as prices rise when OPEC limits the supply of oil, housing costs rise when planners limit the supply of land --- whether through Portland style urban growth boundaries or heavy handed policies that distort development markets.

The timing could not be worse for America's minorities. For half a century, public policy has sought to create equality of economic opportunity for all people, non-Hispanic White, Hispanic, African-Americans and all others. Minority home ownership rates remain a full third below that of non-Hispanic Whites. The good news is that they have been rising at twice the non-Hispanic White rate. Smart growth's land rationing could turn this around.

Minorities have faced discriminatory housing policies before. A federal agency started the practice of "red lining" in the 1930s, a policy which for decades denied mortgage loans to entire minority neighborhoods. By drawing lines outside of which development cannot occur and thereby raising prices, Smart Growth offers to resurrect similar outcomes, through "green-lining." Green-lining excludes many entry level buyers, a disproportionate share of whom are minorities. For example, if housing affordability had declined in Atlanta as in Portland, it is estimated that 25,000 fewer African-American households would have been able to purchase homes between 1991 and 2000 ( see American Dream Boundaries: Urban Containment and its Consequences ).

Further, equity in owned homes represents the most significant source of wealth accumulation for lower middle income people. Thus, this elitist assault on the American Dream will not only injure minorities, but it could also retard overall economic growth.


Wendell Cox is principal of Wendell Cox Consultancy, an international public policy firm. He has provided consulting assistance to the United States Department of Transportation and was certified by the Urban Mass Transportation Administration as an "expert" for the duration of its Public-Private Transportation Network program (1986-1993). He has consulted for public transit authorities in the United States, Canada, Australia and New Zealand and for public policy organizations.

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UGBs & minorities

I don't understand why Mr. Cox didn't provide or suggest that someone research whether the rate of homeownership by minorities has declined or increased during the period of the UGB in Portland. Also, rising housing costs can be offset by providing easier and cheaper access to mortgage financing, which has worked in HOST-sponsored projects.

Urban Growth Boundaries

I do agree in the main with Cox's thesis and also find Collins response cogent. Cities growth in two ways upward and outward. In a free market economy, the constriction of available land for potential development will have a consequence. One cannot expect that implementing an action such as an urban growth boundary to prevent urban sprawl will not have results, some intended and as so often is the case, some unintended results.

It should come as no suprise that an unintended result is a significant increase in land values after the urban growth boundary has been instituted. Yes, as Collins, points out "It stands to reason that as land becomes more scarce, it also becomes more valuable. The higher costs of city living have been proven. Homes/lofts/condos in Los Angeles, San Francisco and NY are ridiculously expensive. " Studies have shown this. I would suggest that some sort of formula should be developed that includes the rate of population influx into an area, the amount of land available for infill, the availability of urban services at the perimeter of an urban area, the types and degree of natural resources in the vacinity of the outer edge of an urban area, that would provide the basis for movement of an urban growth boundary periodically outward. This would be a more realistic approach than some of the approaches to setting an urban growth boundary which seme somewhat arbitrary and extreme.

Here in Florida, we have been experiencing a significant influx of people, although the rate has moderated somewhat in recent years. The Orlando area certainly has been experiencing this growth. Seminole County has an "urban service boundary" and an "East Rural Area" in its comprehensive plan. The East Rural Area is an area on the east side of the City of Winter Springs and north of the City of Oviedo. This area, according to the county comprehensive plan is off-limits to any development - not because it contains so much environmentally sensitive lands (wetlands) but because of approximately 800 souls who want to have a country setting and country lifestyle. Many of the property owners in this area no longer grow citrus because they cannot compete with Brazilian citrus imports and find developers offering high prices for their land.

Why? Because the market demand for housing is there. The Seminole County urban service boundary does not have any guidelines for movement of the boundary. Is it to be static or is it merely subject to politics. So far 800 some people in the East Rural Area have been quite successful in thwarting market demand for more available housing prompted by the influx of people into the Orlando area. Meanwhile housing prices all over Seminole County are appreciating at an accelerating rate.

We need a more realistic approach to preventing urban sprawl, not just simply attempting to stop it with an urban growth boundary that is not well founded and has no guidelines for movement to respond to realities.

UGBs Only Part of the Solution

I have made Atlanta my home for the past 11 years and submit that it provides nothing for urban planners elsewhere to emulate.

Atlanta's working poor may have enjoyed modest improvements in their housing choices, but this says nothing about their overall outlook.

Ths new, affordable housing is mostly located in fast-sprawling areas such as Smyrna and Norcross, which are poorly served by public transportation. Thus, they must shoulder the added personal expense of making long commutes via personal automobile, joining most Atlantans who already drive farther per capita per day than anyone else on the planet.

In hindsight, Portland's decision to institute an UGB constitues possibly a nescessary, but certainly not sufficient, tactic for maintaining a liveable urban region.

In conjunction with UGBs, we should also consider the primary effects that tax policy has on urban growth.

Specifically, we should promote higher-density development within the UGBs by shifting property taxes. As cities like Vancouver and Pittsburgh have already found out, we should assess real estate based on land area, not property value.

Perhaps then, we'll see downtown Atlanta's endless acres of parking lots replaced by places where people can work and live and enjoy.

Is Cox Qualified?

Who is Wendell Cox? He poses as a demographer ("Demographia") and speaks as an economist, but he is neither. Whatever his conclusions, his research is unskilled and reflects simplistic understanding of very complex issues.

I do not think his opinions should qualify as news.

Dowell Myers

UGBs Only Go Halfway

While Mr. Cox does make a point about increases in housing costs coming as a result of an Urban Growth Boundary (UGB), he fails to question whether the "American Dream" is even a good one. Also, even though UGBs can be expanded to accomodate expected need (which Cox does not recognize), enough of those controlled expansions will amount to the same loss of farmland and habitat that a healthy society/ecosystem requires.

Home ownership is not the end all to existence (for my comments I am talking about detached single family housing). Single family detached housing, even at higher densities, is an inefficient use of land and resources. Optimally most people should live in some form of high density housing. There are opportunities to own high density dwellings so people should not have to think that without a suburban home they will forever be at the mercy of a landlord. Our population is large enough that the ideal of the gentleman farmer carried forth in the image of single family detached housing is impractical.

The main problem with UGBs is that they only go half way. Once a boundary is drawn to preserve agriculture and general open space, controls should also be placed on the market to ensure that rents and mortgages within the boundary are affordable to all segments of society.

We have matured as a society and our population has grown large enough that we need to reconsider the popular assumptions of the need for unfettered personal choice and start weighing those choices against what is better for us collectively.

UGB's Work Great

The Portland-Vancouver metropolitan area actually straddles two states
(Oregon and Washington) that both require urban growth boundaries. They also
both Urban growth boundaries do very well at fostering a compact urban
growth form that optimizes the development of infrastructure and makes it
more cost efficient. Urban growth boundaries can also help protect nearby
farm and forest resource lands. However, they don't stop sprawl. The main
problem is that they still allow for urban expansion -- even though it is
more incremental. Urban growth boundaries also don't stop the underbuilding
that undercuts planned densities. UGBs are only one tool in the growth
management tool box.

Finally, the unaffordability of the Portland-Vancouver housing market is not driven by urban growth boundaries. Unfortunately, we have created such a great place to live that everyone wants to come here.

Speculation, Distraction and Mr. Cox

Based upon what Mr. Cox has written it is clear that he is not familiar with Oregon law. Fortunately, for Mr. Cox and those inclined to give him the benefit of the doubt, they can view Oregon's land use legislation on-line at http://www.leg.state.or.us/ors/197.html.

As a couple people- including myself- have already pointed out, the law require cities and towns to maintain 20 year reserve of buildable land within their UGB. There is a periodic review process that is done every 5 to 15 years to determine if the UGB needs to be expanded (see ORS 197.629(c)).

Rather than mislead those unfamiliar with how the Portland UGB works, or speculate, a constructive approach might be to actually read the legislation and/or provide concrete evidence that Metro - the regional government that controls the expansion of the UGB - has repeatedly blocked the expansion of the UGB in a manner that violates the law. If this has happened then the appropriate public officials should be held accountable.

There are much more interesting and useful ways in which Mr. Cox could constructively engage planners (and students like me). Does Mr. Cox believe that it appropriate for a civilization to collectively consider how it will build cities in the future? Does the desire for human scaled communities run counter to some American ideal that I am not aware of? Does Mr. Cox believe that the typical suburban environments meets our needs in the best optimal way? Does he believe that our current landscape is "market-driven".

Others have already provide numerous credible sources that counter Mr. Cox's assertions. The disturbing thing is that regardless of how rigorous studies are that counter his claims, or how many are done, there will always be those who will hear Mr. Cox's "ideas" and lead us down an unproductive path. But of course Mr. Cox already knows this. We need Mr. Cox to provide constructive, well thought out criticism of where we're headed today. Surely there are aspects of place-making that conventional wisdom in the planning community does not have quite right. It would be far more interesting for me to hear things that really make me stop and think and question my own views. Mr. Cox, in his current incarnation, is a serious distraction from the kinds of discussions we could be having.

But maybe Cox Is Right

It stands to reason that as land becomes more scarce, it also becomes more valuable. The higher costs of city living have been proven. Homes/lofts/condos in Los Angeles, San Francisco and NY are ridiculously expensive.

Could it be that the best solution is a community that grows naturally with a slowly expanding urban growth boundary to ensure that uses within the city are optimized, but doesn't arbitrarily prevent growth.

What about an urban growth boundary that has a planned expansion of perhaps 1% per year?

Cox Misunderstands Smart Growth

I have been to Portland and can say that there are no ghettos relative to other similar sized cities. Notably, Cox does not consider this phenomenon.

Its true that the UGB (Urban Growth Boundary) may be responsible for increasing the cost of land in Portlanddue to simple economics. When the supply of land is restricted, the value will increase. Of course, this will have an impact on the cost of housing.

However, to blame the problems of Portland's decrease in affordability on smart growth is to miss the point. Smart growth is more than setting an UGB. It's about integrating uses and incomes. Cox fails to note that the UGB predates the current smart growth/new urbanism ideas and indeed is anathema to many, though not all in the movement.

The main point about new urbanism or smart growth also mixing incomes as well as uses is also missed by Cox. Indeed, he comes perilously close to stating that new urbanists and advocates of smart growth have a hidden racist agenda cloaked in decreasing affordable housing for the poor, who are often disproportionately minority. I have been active in the new urbanism movement for over three years and have worked enforcing fair housing laws for nearly eight years. Smart growth and new urbanism are not anti-minority. They seek to provide integated communities, where the poor and rich (no matter what race) can shop, walk, play, work and live together without the spatial separation that so often characterizes traditional post- World War 2 developments.

Cox may disagree with the tenets of smart growth and new urbanism but at least he should do so in an informed way, without the distortion and misunderstanding contained in his op-ed.

Minority = Poor? Wrong

So minorities are poorer then white people? Maybe THAT is the problem -- not affordablity.

Address the problem -- don't attack those who have solutions.

Wendell Cox Strikes Again

Wendell Cox strikes again. Where shall I begin to respond to this op-ed? This piece was full of fallacies and half-truths that intentionally try to lead the reader to believe Mr. Cox’s biased opinion. He is a master of using numbers to say what he wants, but in reality the situation regarding UGBs is not as he portrays it.

First of all, Portland’s UGB does not necessarily cause higher home prices. A 1998 study examining the relationship between the UGB and housing prices, conducted by Eban Goodstein, a Professor of Economics at Lewis and Clark College, concluded: "Is Portland's UGB responsible for an affordability crisis in that city? Our answer is probably not.”

In addition, the price of raw land is a small fraction of a home's price in Oregon. A home price includes many factors: raw land, land improvements, home design, home construction, financing, and so forth. The 1999 Oregon Housing Cost Study found that the price of raw land—the part of the home price supposedly affected by UGBs—is currently about one-seventh of the price of new homes in Portland, and 3% in Salem and Eugene-Springfield. That means that 86% of the price of a new home in Portland has virtually nothing to do with the supply of land.

Recent increases in housing cost in Oregon include many factors, many of which are more significant than changes in land price. According to the Oregon Housing Cost Study, the median home price in the Portland area rapidly increased from 1991 to 1998. Yet in looking at specific developments, the increase in raw land costs was only $15,704 of the total increase, less than the $25,317 increase in hard and soft land costs (e.g. installing water and sewer lines, utilities, system development charges, architecture fees.) In Eugene-Springfield (which has a UGB) the modest increase in land costs, $1,778, was dwarfed by the increase in the cost of building the house itself, $18,772. In Salem (which has a UGB), land costs rose by only $1,542 while hard and soft land costs rose by $21,670 and the cost of building the house rose by $12,791.

Recent rapid land price increases are mainly caused by economic forces. The increase in housing prices in the Portland metropolitan area precisely tracks the region's growth in employment and population. "More conventional demand side housing market dynamics explain housing price increase in Portland. Since the early 1990s, the region has enjoyed above average employment growth.

Mr. Cox claims that the UGB makes Portland one of the nation's least affordable places to live. This "factoid" is based on thoroughly discredited statistics. This claim is based on the affordability rankings put out by the National Association of Home Builders (NAHB). These rankings have been thoroughly discredited. Even Oregon Building Industry Association lobbyist Jon Chandler was forced to admit there is no good information linking UGBs and home prices.

It is a myth that Oregon’s housing is relatively expensive. The State of the Nation's Housing: 1999, published by Harvard University's Joint Center for Housing Studies, found Oregon (whose 240 cities all have urban growth boundaries) relatively affordable. Oregon was in the middle of the pack nationwide in the number of full-time job incomes needed to rent a typical two-bedroom apartment, and the cheapest among west coast states (Washington, California, Oregon, and Alaska).

It is also a myth that UGBs severely limit residential land supply. Oregon law requires fast-growing cities, cities with populations over 25,000, and metropolitan service districts to include enough buildable land for the next 20 years of residential growth within their urban growth boundaries (Oregon Revised Statutes, 197.296). A perpetual 20-year supply of residential land clearly is not a severe limit.

A joint study by the Home Builders Association of Metropolitan Portland and 1000 Friends of Oregon concluded that Oregon's program of UGBs, in combination with other tools from the land use program, has kept housing prices in the Portland metropolitan area two to three times more affordable than other West Coast cities. This is because the program requires cities to designate land for all types of housing, and because developers wishing to build on that land get one of the fastest permitting processes in the nation. (1000 Friends of Oregon and The Home Builders Association of Metropolitan Portland, "Managing Growth to Promote Affordable Housing: Revisiting Oregon's Goal 10," 1991.)

"Oregon's growth-guiding legislation has successfully fostered affordable housing. UGBs are an effective tool. UGBs create a decision system, making it clear to government officials, real estate developers, financial institutions, property owners, and residents where development may occur."

Common ground between Cox and opponents

There is a common ground between those that believe that 'people should have the freedom to live and work where and how they like' and those that have a vision of urban growth that benefits all. The common ground is simply to ensure that individuals make decisions about where to live and work taking full account of the social costs of those decisions. Hence, if extra commuting time was associated with increased emissions, then a system of charges is required to reflect this - fuel excise is too blunt for this purpose. Similarly, peak hour users of transit should bear the costs of expanding capacity.

The debate needs to shift from 'fuel use is bad' to 'we don't care whether people use energy to heat and aircondition their mansion or to drive their cars as long as they pay the cost of the externalities associated with the energy use'.

It is not until these distortions (and others) are removed from decision making that the clear picture of urban development would emerge.

The next stage for town planners unhappy with the outcome would be to identify and articulate the objectives of improvements that they had in mind. Measures used to pursue these objectives need to be assessed and their benefits and costs clearly identified. For too long have policy measures been introduced solely on the basis of their aims.

Take for instance the catch-cry 'choice'. Choice in transport and residential environments sounds unarguably like a 'good thing'. But choice at what price? Also, who should pay to ensure that those fortunate enough to live near heavily subsidised transit systems have a choice of travel modes?

Get the prices right, including the price of agricultural land, and then decide whether further action is warranted. However, there is no sense at all in denying that for most goods and services, land included, restricting supply increases the price.

Mr. Cox and his insights

I was pleased to read Mr. Cox's contribution to Planetizen.

For those who are interested, Mr.Cox presents his views in greater detail at the Heritage Foundation - the group from which New Gingrich drew inspiration. I doubt very seriously that the minorities Mr. Cox agonizes over in his Planetizen contribution draw inspiration from the same source. Similarly, the Heritage Foundation states clearly its belief that human induced climate change is a ruse.

Mr. Cox's comments might lead one to think he is unfamiliar he is with the principles of smart growth. Housing affordability is central to the idea of mixing land uses and housing types. As new TND ordinances in places like Wisconsin and Maryland increasingly alter patterns of development, a mixture of housing types (i.e. affordability) will begin to emerge. (Thus far TND has fallen short of the objective of affordable housing.) Truly walkable communities also offer the possibility of dispensing with one or more family automobiles as more locations are placed in close proximity to each other.

Mr. Cox cites data from the NAHB in an attempt to demonstrate growth boundaries translate into higher home costs in Portland Oregon. His data come from a group intensely hostile to the public objectives that Oregon's land use legislation attempts to pursue. There is no methodology or reputable source for the data - only that the people who want to build homes where ever they want in Oregon (i.e. the NAHB) say that housing is too expensive , therefore it must be true. I find published reports of this kind disturbing. Many other people have refuted the argument that Mr. Cox makes regarding affordability and the UGB. By law Portland is required to maintain a 20 year urban reserve for development. I would like to see hard evidence that this reserve is not being extended fast enough from Mr. Cox.

According to Mr. Cox those who seek to build better communities than we've been erecting since Levittown went up in 1947 are "elitist". He says that the Brookings Institution has got its data all wrong. He says the people at National Geographic are similarly misguided enough to publish their story on sprawl. Presumably this is because the information contained between the covers runs counter to Mr. Cox's stated belief that "people should have the freedom to live and work where and how they like."

Too often times Mr. Cox publishes "findings" that run counter to every other reputable source of information. This past week the Canadian Broadcasting Company ran a series on sprawl that talked about Portland's air quality relative to Atlanta's. The information was radically different from what Mr. Cox has published on one of his many "public policy" web sites. I anticipate another article from Mr. Cox telling the CBC researchers that they are wrong too.

I did not decide to become an urban planner because I was not making enough money working writing software. I got in this profession because I think that after 7000 years of city building we can build much better places than what I see every day out my window. Urban growth boundaries will not solve the problem, (I've seen the Portland suburbs - I know) but the idea of containment is something that anyone serious about the issues of our time would do well to explore in more detail.

Since Mr. Cox's stated belief is that "people should have the freedom to live and work where and how they like" one can only imagine what kind of place Mr. Cox would consider to be ideal. I wonder what his vision is for place-building in the century ahead? More of the same? Atlanta, but only bigger? Private citizens each pursuing their private interests? I disagreed with Mandeville's 18th century vision of the future, and I can only wonder about a Coxian future in which each man and woman exclusively pursues their own private interests in the years ahead. Any ideology in its purest form seems questionable at best. In a general sense I suppose I am searching for more intelligent comments regarding place-making from Mr. Cox. Dispense with the custom made statistics that support one's notion of freedom. We live in an infinitely more complex world.

Patrick Moan is a graduate student at Dalhousie University in Halifax, Nova Scotia.

Wendell's Race Card

Wendell's latest attack is a political ploy using the Race Card, baiting hatemongers. Wendell searches statistics from afar, to bash Portland, New Urbanism, Smart Growth and Urban Growth Boundaries. He never admits to Portland's successes. Housing is less affordable in many other cities, while the quality of life is not as good. I've visited enough cities to know that Portland is rightly to envied and hopefully emulated. There is little racial tension in Portland despite evidence of gentrification. Perhaps it is not gentrification as much as successful integration? Portland has many housing assistance programs for renters and first-time home buyers. Portland has an outstanding record controlling traffic, providing excellent mass transit, constructing superb pedestrian and bicycling amenities. Wendell will never win an argument against Portland's planning efforts.

Urban Growth Boundaries

Wendall, so what's the solution, more urban sprawl? Suburbs have also had a long history of keeping out the disadvantaged. Somehow I don't think that by trashing the UGB, the housing ills of the poor will be solved. Portland does many things right, perhaps there needs to be a more concerted effort at providing affordable housing. Clearly, its not a simple solution, but don't we need to work towards a long term, holistic planning approach, not short term band- aids that will not ultimately solve the larger issues.

Regards.

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