Helping Cities Grow Smartly

REALTORS® act as consensus builders in local growth debates to help preserve quality of life and private property rights.

May 1, 2000

The more Jack Potter, GRI, talks about smart growth, the more emphatic he becomes.

For Potter, whose 30-year real estate career in the Chicago area includes a stint as a homebuilder, there’s one principle that should never be compromised in the growth debate, and that’s private property rights.

“We can’t build ourselves cities with wall-to-wall development-everyone knows that,” says Potter, a sales associate with Coldwell Banker Mac Realty, Waukegan, Ill. “But in our rush to fix the symptoms of sprawl--congestion, inadequate infrastructure, even changes of scenery--we have to resist the temptation to abandon our private property rights.”

Potter’s passion sits at the core of efforts to tackle what many believe will become the first defining domestic debate of the new millennium: smart growth. The term refers to the complex set of development issues that have resulted from the country’s booming economy. Good times have meant robust development, particularly in outlying areas, as prosperous households move farther from metropolitan centers looking for private space, newer schools, and lower taxes.

Now, with congestion and air quality worsening, open space disappearing, and concerns growing over the abandonment of urban areas, many people are saying enough is enough. In 1998, voters approved 75 percent of some 240 state and local ballot initiatives to limit growth.

Vice President Al Gore put growth on the national agenda when he introduced the Clinton administration’s livability initiative. The centerpiece is a $10 billion bond program to help states and localities buy land for preservation. That initiative is now pending in Congress.

REALTORS® recognize that their communities’ quality of life suffers in an environment of unfettered growth. But solving the fast growth’s ills isn’t as simple as putting on the brakes. As communities struggle to reconcile needed development with land preservation efforts, they must account for the rights of private property owners. And practitioners like Potter, who sits on a state smart growth task force, are working to deliver solutions that are right for their market.

Market-based solutions

“It’s paramount that with growth controls we go to market-based solutions,” says Gilbert White, broker-owner of Gilbert M. White, REALTOR®, in Haslett, Mich. Like Potter in Illinois, White represents REALTORS® in his state on a task force that’s looking at growth issues.

REALTORS® in White’s state walked away from several bills last year because they didn’t offer sufficient market-based incentives for property owners to sell their land for preservation.

Preservation is a growing issue in Michigan because after years of population losses, Detroit, Flint, and Lansing are now among the fastest growing metro areas in the country.

Michigan REALTORS® worked with others in the private sector to propose an incentive approach that would reward developers with zoning benefits, including density bonuses and expedited approval processes, in exchange for selling land to the state government for preservation. The provisions didn’t make it into last year’s bills, so it’s back to the drawing board.

But out of disappointment grew a victory for real estate interests, because the private sector groups on both sides rallied around the market-based approach, at least in principle.

Endless desert? Not quite

Although the search for common ground takes a different shape in different parts of the country, the issues are remarkably similar.

“Builders say they’re regulated to death, even out here in the ‘entrepreneurial’ West,” says Gary Coles, ABR®, CRS®, an associate with Americor Realty in Las Vegas, and president of the Greater Las Vegas Association of REALTORS®. “The pressure’s on now because we have some 6,000 people moving here every month.”

Las Vegas has been a fixture at the top of city-growth charts for the past decade, exploding from a population of 528,000 in 1980 to more than 1.25 million today. In part because the city has had plenty of room to grow, developers found a good market for building moderately priced housing--the median single-family home price is less than $130,000--but buyers are moving farther out to get it, says Jack Woodcock, broker-owner of Prudential Americana Group, REALTORS®, Las Vegas.

Now, with commutes growing to 30 minutes, city leaders are talking about a growth boundary, something on the order of that in Portland, Ore. Portland has become the poster child of everything that’s right--and everything that’s wrong--with mandated growth controls since it established a boundary some 20 years ago. (See “ Selling Smart Growth in Portland,” Oct. 1999).

“A definite ring around the valley would impose restrictions on what you could do with your land outside the ring, and that raises property rights issues,” says Woodcock. “We’re in a better position than many communities because we still have room to build, though we’re getting to the point where that’s changing.”

Las Vegas’ experience mirrors that of Riverside-San Bernardino 10 years ago. The Southern California region underwent tremendous growth beginning in the 1980s and is now trying to get a handle on dwindling land and crushing transportation snarls. City council members in Temecula, Calif., debated a building moratorium last year. Although the proposal was withdrawn, pressure is mounting there and in nearby towns to curb development. That, in turn, is impacting affordability.

“Home prices have climbed rapidly here,” says Mike Teer, broker-owner of Teer One Properties, Riverside. “Five years ago, the median price for a home was $120,000. Now it’s $153,000. If you impose a building moratorium, it’s going to exacerbate affordability problems and force developers into nearby unincorporated areas--and you’re still going to get congestion and feel the cost impact of infrastructure.”

Preservation by law

In Arizona, land concerns are behind a push by the governor to take designated land off the market by having owners sell it for inclusion in a stewardship trust. In the state’s major metro areas, Phoenix and Tucson, there appears to be enough land for both preservation and development, but REALTORS® say there’s less developable land than meets the eye.

Remove open space that’s either unsuitable for development or taken off the market for other reasons--government ownership, wildlife habitat protection--and little land remains. The governor’s proposal could impact another million acres.

“We support the trust, but we want to see the qualifying criteria for targeted lands,” says Tom Farley, the Arizona Association of REALTORS®’ political affairs officer. “It’s OK to save the crown jewels, but if it’s just to preserve any land, we couldn’t support that.”

REALTORS® in Arizona say sellers should be compensated on the basis of a property’s highest and best use, which typically means development. Anything short of that would be considered a government “takings” and would spark a backlash by property owners, Farley says.

For the Chicago area’s Jack Potter, it’s the takings issue that makes him so passionate about private property rights.

“If it’s good for the public to protect certain land, we need to protect the land,” he says. “But we have to pay market dollar for it. A lot of people say, ‘That’s such a pretty cornfield; let’s just pass a rule and say you can’t build houses there.’ Well, you’ve just devalued someone’s property by 85 percent.”

Slow-growth candidates in the Chicago suburbs have been winning elections, and that has pushed real estate industry groups into battles with local officials, who are trying to use their regulatory powers to stop growth.

At the state level, lawmakers quadrupled funding for a land trust, and now a public-private advisory group is developing guidelines for how the money should be spent. Potter says he’s hoping the spending rules don’t dilute the fund’s market-based approach, which requires that land be bought only from willing sellers.

Probably nowhere are the stakes higher than in Atlanta, the fastest-expanding human settlement in history, as one commentator has put it. The metro area now covers 110 miles, north to south, up from 65 miles nine years ago.

To address the gridlock that’s starting to paralyze the city, the state last year created a regional transportation authority. The governor, Roy Barnes, also wants to create green space using 20 percent of open land around the city, a goal local REALTORS® say they endorse. But, again, the issue is how that’s done.

Jenny Pruitt, president of Jenny Pruitt & Associates, Atlanta, and president-elect of the Atlanta Board of REALTORS®, wants to use market incentives to direct growth back to the city core.

Traffic woes have already sparked interest in a return to the city among young professionals and retirees, a trend that smart growth initiatives should reinforce. “We need to level the playing field so that developers are enticed to build inside the perimeter,” Pruitt says.

West of Atlanta, the city of Dallas has had some success in attracting people back to the central city. Dallas’ downtown rebirth is due in large measure to tax incentives that motivate developers to target downtown redevelopment, says Ronda Needham, manager of Ebby Halliday’s Highland Park office, Dallas, and past president of the Greater Dallas Association of REALTORS®.

But Dallas’ urban renaissance remains a trickle in a sea of suburban sprawl. Local officials in one outlying area, called Flower Mound, imposed a building moratorium a few years ago because the growth had overwhelmed their ability to provide infrastructure. A similar problem is now hitting another outlying area, called Prosper, which just a few years ago had scarcely enough services to qualify it as a roadside rest for farmers.

And Dallas isn’t the only city experiencing riotous growth in its “exurbs,” areas lying outside the traditional suburban ring.

The famously good government area of Minneapolis-St. Paul has had growth rings in place for 20 years. But when the rings were redrawn five years ago, the dynamic shifted. Critics say the new boundaries don’t provide space to meet rising home demand, so developers are leapfrogging the suburbs and targeting rural areas that a few years ago would have seemed too remote to be attractive.

“We were hit with a double whammy: significant growth and a cutoff in supply,” says Chris Galler, senior director of public affairs at the Minnesota Association of REALTORS®.

The outlying development, by offering more affordable houses on good-sized lots, is helping maintain an attractive market for younger households, but it’s also fueling sprawl concerns.

Preserving local control

The Washington, D.C., metro area is one of the epicenters of the debate over leapfrog development.

Outlying Northern Virginia areas now dwarf the nation’s capital in population growth and job creation. And the growth debate there is getting so hot that elected officials in Loudoun County, one of the fastest-growing counties in the country, created a defense fund to fight expected developer lawsuits once they start implementing the slow-growth policies they ran on.

Local real estate practitioners are circling their wagons around the idea of higher-density cluster development, particularly around transportation corridors. Such development would help expand the supply of moderate-priced housing.

“We’re not suggesting no more low-density housing,” says Doug Gray, government affairs director at the Virginia Association of REALTORS®. “We want a mix. If you can get some efficiencies by serving some dense pods of housing, you can continue to grow in a way that’s smart.”

VAR is supporting a state conservation trust because it finances acquisitions using money in the state’s general fund and federal matching dollars. It also prohibits acquisitions from unwilling sellers.

What Virginia REALTORS® don’t want is for the state to curb growth at the expense of local land-use authority. “We want legislators to know that localities have sufficient authority to curb growth,” says Gray. And whether local officials wield that authority correctly is a matter of local concern.

The issue of local authority is a small episode in the growing sweep of the smart growth issue. But it will be through these kinds of small-scale, local negotiations between private and public sector interests that growth issues will get resolved, practitioners say.

And so far, the REALTOR® position that smart growth means neither no growth nor big growth but rather incentive-driven, community-first growth is resonating with stakeholders on every side of the issue.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.

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